Silver (XAG/USD) edged lower to around $33.80 on Monday after touching its highest level since October 31, 2024, during Asian trading hours. Despite the decline, the downside remains limited due to ongoing economic uncertainty fueled by the global trade war and a softer U.S. dollar.
The escalating trade tensions between the U.S. and its key trading partners have heightened concerns about global economic stability, bolstering demand for safe-haven assets like silver. Last week, former U.S. President Donald Trump threatened a 200% tariff on all alcohol imports from the European Union and raised levies on Chinese imports to at least 20%. These measures have added to market volatility, supporting silver’s appeal as a hedge against economic instability.
Beyond its role as a safe-haven asset, silver also benefits from supply deficits and surging industrial demand. According to investment firm WisdomTree, investors continue to hold substantial silver reserves, anticipating higher prices to encourage sales. Industrial demand for silver has reached record highs, driven by its critical applications in photovoltaic technology, 5G networks, and automotive electronics.
Looking ahead, traders will closely monitor the U.S. Retail Sales report for February, which is projected to rise by 0.7% month-over-month. A stronger-than-expected result could strengthen the U.S. dollar, potentially putting downward pressure on silver prices in the near term.
