Here's your trading guide for Silver on Friday, April 4; check details

Silver has been subjected to intense selling pressure due to its industrial attribute. Nearly 64 per cent of the total demand for the metal is industrial, says Praveen Singh of Mirae Asset Sharekhan

Silver: Tumbles as reciprocal tariffs send a shockwave to global economy

 

Performance

 

Spot silver swung between $31.72 and $34 on April 3 as it fell more than $2 to close with a loss of around 6 per cent at $31.85. The white metal tumbled on demand concerns as Trump’s reciprocal tariffs were much higher than the markets’ expectations.  

 

Reciprocal tariffs pose a risk to the global economy

 

Much against the markets’ expectations of the US levying a 10 per cent baseline tariff on all the concerned countries, the announced tariffs turned out to be quite severe and have shocked the markets. The reciprocal tariffs, announced by the Trump Administration on April 2, 2025, are based primarily on the US trade deficit with an individual nation. The tariffs have been calculated by dividing a country’s trade surplus with the US by its total exports, based on data from the US Census Bureau for 2024, then dividing that number by two, to arrive at the so-called “discounted” rate. The discounted tariffs are roughly half of what the countries levy on the US exports. Even the countries with which the US runs a trade surplus have also been hit as these countries will face a flat 10 per cent rate regardless. Reciprocal tariffs on the EU will amount to 20 per cent, 34 per cent on China, 24 per cent on Japan and 10 per cent on the UK. China, considering the 20 per cent tariffs imposed earlier, will be subjected to a 54 per cent tariff rate. Overall, the proposed US tariffs are at the highest rate in more than a century.

 

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Despite a possibility of eventually lowering tariffs down the line through new deals with trading partners, the present situation looks grim as the concerned countries, like China, France, and Germany, may retaliate, though some of the countries like Mexico and UK intend to ‘wait and watch’ before acting. 

 

US Commerce Secretary Lutnick, on April 3 warned that retaliating nations may face higher tariffs.   ALSO READ | Safe-haven demand for gold may rise further; check support, resistance here

 

It is being estimated that tariffs may shave around 1.3 per cent off the US GDP growth. Impact on China’s economy could be more than 2 per cent so China will need more fiscal and monetary stimulus to negate the tariff impacts.

 

Data roundup

 

US data released on Thursday were largely disappointing. US weekly job data were mixed as initial jobless claims (March 29) came in at 219k (estimate 225K) but continuing claims (March 22) soared from 1847K to 1903K, more than a three-year high. ISM services Index (March) fell from 53.50 to 50.80 (forecast 52.90), slowest since July 2024 as ISM services employment unexpectedly contracted.

 

Upcoming data

 

Today, the US non-farm payroll report (March) will be released. The median estimate of change in non-farm payrolls is 140K (prior 151K). The report will be crucial to financial markets.

 

US Dollar Index and yields

 

The US Dollar Index dropped by most on record as US yields crashed on economic concerns. Investors are worried that the new tariff regime may hurt the economic prospects of the US more than that of other nations. Dollar was down against all Group-of-10 peers as Yen and the Euro led the pack. The Dollar Index closed with a loss of 1.95 per cent at 101.78. The Euro rallied 2.7 per cent, the sharpest intra-day gain in nearly a decade.

 

The ten-year US yields fell below 4 per cent for the first time since Trump's re-election as a President. The yields settled at 4.02 per cent, down around 2.4 per cent on the day. The two-year US yields fell to 3.68 per cent, lowest since October 4, and settled 3.78 per cent lower at 3.69 per cent.

 

Upcoming event

 

In addition to the US nonfarm payroll report, traders look forward to the Fed Chair Powell’s speech on economic outlook scheduled for Friday.

 

ETF

 

Total known global silver ETF holdings stood at 719.588MOz as on April 2. Holdings are up around 0.3 per cent this year as ETFs have recorded inflows for three straight weeks.

 

COMEX Silver inventory

 

COMEX Silver inventory stood at an all-time high level of 482.57 MOz as on April 2.

 

Outlook

 

Silver has been subjected to intense selling pressure due to its industrial attribute. Nearly 64 per cent of the total demand for the metal is industrial. Gold/Silver ratio at 98 has reached nearly 4-year high. Looking quite oversold,  the metal may still face further downside pressure in the very short term due to poor risk appetite. A test of support at $31.48 (MCX May Silver contract Rs 93,000)/$30.88 (Rs 91,300) is possible which should provide a good opportunity to buy for medium to long term. Resistance is at $32.50 (Rs 96,000)/$33 (Rs 97,500).

 

(Disclaimer: Praveen Singh is an associate VP of fundamental currencies and commodities at Mirae Asset Sharekhan. Views expressed are his own.)