SILVER Analysis
Afternoon: Silver Surges abvove 33$ Amid Escalating US-Canada Trade Tensions and Recession Fears
Highlights:
- Silver reached $32.80 as investors sought safety amid stock market sell-offs and economic uncertainty.
- US-Canada trade tensions intensified as Trump raised tariffs on Canadian steel and aluminum to 50%.
- Markets expect an 88-basis point Fed rate cut, higher than the previously anticipated 75 bps reduction.
Overview:
Gold prices fell below $2,900 per ounce as investors engaged in profit-taking while awaiting key U.S. inflation data for insights into the Federal Reserve’s next policy move. The market remains cautious amid rising economic uncertainties, trade tensions, and upcoming economic data releases.
Market Analysis
Silver prices soared to $32.80, driven by heightened economic uncertainty and renewed trade tensions between the United States and Canada. A broader sell-off in equity markets, fueled by concerns over slowing global growth and a possible US recession, prompted investors to shift toward safe-haven assets like silver.
Trade relations deteriorated further after US President Donald Trump announced an increase in tariffs on Canadian steel and aluminum imports from 25% to 50%. This move was in direct retaliation against Ontario’s decision to raise energy export taxes to the United States by 25%. Additionally, Trump threatened to impose hefty taxes on Canadian automobile imports, escalating fears of another trade war that could impact both economies.
In economic data, the US Labor Department reported stronger-than-expected job openings in January, signaling resilience in the labor market despite broader recession concerns. At the same time, Federal Reserve expectations have shifted, with investors now anticipating an 88-basis point rate cut this year, an increase from the previously expected 75 bps. Lower interest rates could further bolster silver’s appeal, as non-yielding assets tend to perform well in low-rate environments.
Market Outlook & Trading Strategy
With escalating trade tensions, economic slowdown concerns, and shifting Fed rate expectations, silver is expected to remain highly volatile. Traders should watch for key inflation data releases, including Core CPI (m/m), CPI (m/m), and CPI (y/y) from the US, for further market direction.
Action: Buy on dips near $32.80, targeting $33.30, with a stop loss below $32.55 to manage risk effectively.
Support and Resistance Levels:
