Silver Prices and India's CEPA Review Impact

Market Overview

Silver (XAG/USD) hovered around $28.79 during Friday’s Asian trading session, just below its weekly high. Despite favorable market conditions, including a weakening US dollar and anticipated Federal Reserve rate cuts, silver’s price movement remained subdued. Traders are taking a cautious approach ahead of the critical US Nonfarm Payrolls (NFP) report, which could provide further direction for silver prices.

India’s CEPA Review with UAE Sparks Uncertainty in Silver Market

India’s silver imports from the UAE surged 5,853% year-over-year, totaling $1.74 billion in FY24, compared to just $29 million the previous year. The massive increase is linked to tariff concessions under CEPA, a trade deal between India and the UAE implemented in May 2022. Although the deal was initially seen as a step toward free trade, India’s recent review questions the long-term benefits, particularly regarding the surge in precious metal imports. The uncertainty surrounding the trade agreement and its potential revisions could influence future silver imports, thereby impacting global silver prices.

First Majestic Silver’s Merger with Gatos Silver to Boost Production

In corporate news, First Majestic Silver has announced a merger with Gatos Silver, valuing the latter at $13.49 per share. The merger will consolidate three major silver mining districts, increasing First Majestic’s silver-equivalent production to 30-32 million ounces annually, including 15-16 million ounces of silver. With projected all-in sustaining costs between $18.00 and $20.00 per ounce, the merger is expected to strengthen First Majestic’s global standing. However, increased supply could put downward pressure on silver prices, contingent on demand trends and production costs.

Short-Term Forecast

Silver is likely to stay range-bound between $28.35 and $28.88. A break above $28.88 could trigger bullish momentum, while dropping below $28.35 signals further downside risks.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver – Chart
Silver (XAG/USD) is trading at $28.79, down 0.08%, with a key pivot point at $28.88. Currently, silver is facing resistance near the $29.34 mark, while immediate support lies at $28.35. The 50-day EMA stands at $28.76, and the 200-day EMA is just above $28.87, indicating a tight trading range. A break above $28.88 could signal a bullish shift, pushing prices toward $29.66 and $30.03. However, if silver dips below $28.35, further downside toward $28.08 and $27.71 is likely. Traders should watch for a decisive move above $28.88 to confirm a potential upward trend reversal.