Silver (XAG/USD) prices plunged over 1.5% to near $33.00 during North American trading hours on Friday, reversing earlier gains. The white metal had reached a three-week high of $33.70 earlier in the day before sharply declining. The drop comes amid growing confidence that the United States (US) and China will reach a trade deal sooner than expected.
Trade War Easing Boosts Market Sentiment
Investor sentiment has improved on the back of reports that China is considering suspending additional tariffs on US medical equipment and certain industrial chemicals, according to Bloomberg. This news has raised hopes of a potential de-escalation in the trade war between the two largest global economies.
As the outlook for a resolution brightens, global economic prospects appear more favorable. The positive shift in expectations reduces the demand for safe-haven assets like silver, which tends to benefit during times of uncertainty.
US Dollar Strengthens Amid Trade Negotiation Uncertainty
Meanwhile, the US Dollar has rebounded after a corrective dip on Thursday. The US Dollar Index (DXY), which tracks the currency’s value against a basket of six major rivals, is recovering toward the 99.75 mark. However, conflicting statements from US President Donald Trump and Chinese officials regarding the status of trade talks have left investors uncertain. While Trump has expressed optimism about ongoing negotiations, China has denied reports of current economic and trade discussions, which could keep market sentiment mixed.
Silver Technical Analysis
Silver’s recent price drop follows the failure to maintain its three-week high around $33.70. Despite this, the near-term outlook for the white metal remains bullish, as it continues to hold above the 20-day Exponential Moving Average (EMA), which currently sits around $32.60.
The 14-day Relative Strength Index (RSI) has struggled to break above the 60.00 level, but a move above this threshold would signal fresh bullish momentum. On the upside, the March 28 high of $34.60 will act as key resistance, while the key support level lies at the April 11 low of $30.90.
