Silver dips below multi-decade high

Silver edged lower to near $38.80 in early European trading on Tuesday, yet, XAGUSD is close to its decades-high around $39.00. The outlook for the white metal remains bullish on upbeat demand for safe-haven assets as concerns over global trade flows continue to persist.

Escalating trade tensions between the US and the European Union have raised trade tensions across the world, given the scale of business between both economies. EU officials are preparing for countermeasures to offset the impact of additional tariffs imposed by the US, while struggling to reach a deal.

On Monday, Germany joined its European peers and pressed for a tougher stance on Washington as President Donald Trump demanded a higher baseline tariff rate for signing a trade deal. “If they want war, they will get war,” Bloomberg reported.

Over the weekend, a report from the Wall Street Journal showed that President Trump is eyeing a higher baseline tariff rate in the 15-20% range against 10% as previously stated. The report also showed that Trump is least interested in waiving 25% tariffs on automobiles.

Theoretically, heightened global trade tensions increase demand for safe-haven assets, such as silver.

Meanwhile, growing expectations for the Federal Reserve to keep interest rates in the current range of 4.25-4.50% for longer have failed to weigh on the price of silver price. Higher interest rates by the Fed for longer bode poorly for non-yielding assets, such as silver.

XAGUSD price charts by TradingView