XAGUSD: A rush for physical silver has helped to push prices toward recent highs.
The price of XAGUSD is approaching recent resistance at $34.20 and a breakout higher could another leg to the rally.
In recent months, there has been a drive to bring physical silver onshore to the United States, leading to a sharp rise in COMEX inventories, which are 60% higher since December.
While the official explanation points to potential tariffs from the Trump administration on imported silver, there may be other reasons for the scramble. Further confirming the scramble for physical silver has been a surge in trading volume since December in the Sprott Physical Silver Trust, the most well-known physically backed silver exchange-traded product. The non-physically backed iShares Silver Trust has been flat over the same period, highlighting a clear investor preference for products backed by real silver.
Another reason for the recent surge is that gold has hit new highs this year. Over the past year, gold has outperformed, while silver has lagged, but the dynamic may be about to shift. Silver remains deeply undervalued relative to gold, and a correction in that dynamic may be imminent.
With gold now holding the level above the key $3,000 psychological level, the bias remains to the upside. This continued bullish momentum in gold should create a strong tailwind for silver moving forward.
Silver’s outlook is increasingly tied to the inflation narrative playing out in the global economy. President Trump’s reciprocal tariffs, set to take effect April 2, are widely expected to boost import prices. Economists estimate the inflation impact could exceed a full percentage point, while Fed officials anticipate a temporary spike, others warn of longer-lasting pressure, adding uncertainty to interest rate decisions.