Silver Price Forecast: XAG/USD falls toward $30.50 as US Dollar rises on hawkish Fed

• Silver prices decline as the US Dollar strengthens, with expectations that the Fed will maintain its rate in January.
• Silver demand could rise due to persistent concerns over supply issues, especially in London vaults, coupled with robust industrial demand.
• Silver futures premiums decrease following reports that Trump plans to delay new tariffs.

Silver price (XAG/USD) pauses its three-day rally, trading around $30.60 during the Asian session on Thursday. Dollar-denominated Silver encounters challenges as the US Dollar is likely to strengthen, with traders anticipating that the US Federal Reserve (Fed) will maintain its benchmark overnight rate in the 4.25%-4.50% range during its January meeting.

Additionally, US President Donald Trump’s policies could increase inflationary pressures, potentially limiting the Fed to just one more rate cut. This could bolster the Greenback and reduce demand for commodities like Silver.

However, Silver demand may be strengthened by ongoing concerns about supply issues, particularly in London vaults, along with strong industrial demand, especially in manufacturing, which has supported the grey metal.

Initially, US President Donald Trump’s tariff threats had pushed premiums for Silver futures higher as traders prepared for possible disruptions. However, reports that Trump would postpone new tariffs helped alleviate some of the pressure, leading to a reduction in premiums.

On Tuesday night, President Trump announced plans to impose a 25% tariff on imports from Canada and Mexico, as well as duties on the European Union. He also revealed intentions to implement a 10% tariff on Chinese imports starting February 1, citing concerns over fentanyl shipments from China to Mexico and Canada, according to Reuters.

In reaction, Chinese Vice Premier Ding Xuexiang cautioned on Tuesday about the potential consequences of a trade war, stating that "there are no winners" in such conflicts. His comments come as China prepares for the possibility of new tariffs under the Trump administration, as reported by CNBC.