Silver (XAG) Forecast: Tariffs, Inflation, and Silver Prices—What Traders Need to Know

Silver Gains Momentum as Gold Soars

Silver prices climbed last week, supported by strong safe-haven demand and a bullish trend in the broader precious metals market. Gold’s rally to a record high of $2,954.96 per ounce served as a tailwind for silver, with investors increasingly viewing the metal as a leveraged play on gold. The push into silver is being driven by rising geopolitical risks, inflation concerns, and ongoing market uncertainty under U.S. President Donald Trump’s aggressive trade policies​​.

Silver has gained 14% so far in 2025, following a robust 21% rise in 2024, reflecting strong demand across both precious and industrial markets​. Industrial uses, which account for about half of silver’s demand, are also contributing to its strength despite fears that a potential trade war could impact global manufacturing activity​.

Trade Tariffs and Inflation Fuel Safe-Haven Demand

Trump’s proposed tariffs on auto imports, semiconductors, pharmaceuticals, and lumber are driving market volatility and inflation fears​. With new duties on top of existing tariffs on Chinese imports, steel, and aluminum, businesses are bracing for potential supply chain disruptions. These policies have spurred demand for hard assets like silver, which investors often use to hedge against inflation and currency devaluation​​.

Inflation data remains a focal point for traders. The Consumer Price Index (CPI) for January showed a higher-than-expected 0.5% monthly increase, with the annual rate climbing to 3%—the highest since June​. The Federal Reserve’s preferred measure, the Personal Consumption Expenditures (PCE) Price Index, is expected to be less severe, but uncertainty around the central bank’s policy path persists.

Fed Policy and Economic Signals Under Scrutiny

The Federal Reserve maintained interest rates at 4.25%-4.50% in its latest meeting, signaling caution as inflation risks tied to Trump’s tariffs remain a concern​. With the Fed showing reluctance to cut rates, the appeal of non-yielding assets like silver remains robust. The central bank’s upcoming data releases, including the PCE index and consumer confidence measures, could influence market sentiment​​.

Chicago Fed President Austan Goolsbee noted that while inflation has eased from the highs of 2022, new tariffs could introduce fresh supply shocks reminiscent of those seen during the COVID-19 pandemic​. Market participants are also closely watching developments in the U.S.-Russia peace talks and the outcome of German elections, which could impact global financial markets​.

Market Outlook: Fundamentals Remain Strong for Silver

Silver’s outlook remains positive, driven by both monetary and industrial demand. As inflation fears persist and geopolitical risks grow, silver’s dual role as a precious metal and an industrial commodity provides a robust foundation for further gains. While the potential for new tariffs adds uncertainty to industrial demand, silver’s safe-haven appeal should continue to attract investors looking for stability.

The market will focus on upcoming U.S. economic data and Federal Reserve communications for clues on inflation and interest rate policy. If inflation concerns deepen and the Fed maintains a cautious stance, silver could benefit as a preferred asset in an uncertain economic environment.

Technically, silver posted an inside move last week, which suggests investor indecision and impending volatilty. A trade through $33.29 will reaffirm the current five-week rally.

The market is straddling a support zone at $31.81 to $32.53. Look for a bullish tone over $32.53, and a bearish tone under $31.81 with $30.44 the next likely target if the first support fails.

More Information in our Economic Calendar.