Silver (XAG/USD) price halted its three-day rally, trading around $30.60 during the Asian session on Thursday (1/23). Dollar-denominated silver faces challenges as the US Dollar is likely to strengthen, with traders anticipating that the US Federal Reserve (Fed) will keep its benchmark interest rate in the range of 4.25%-4.50% during its January meeting.

In addition, US President Donald Trump's policies could increase inflationary pressures, potentially limiting the Fed from cutting interest rates one more time. This could strengthen the Greenback and reduce demand for commodities such as Silver.

However, demand for Silver could be supported by ongoing concerns about supply issues, particularly in London vaults, along with strong industrial demand, particularly in manufacturing, which has been supportive of the grey metal.

Initially, US President Donald Trump's tariff threats had pushed premiums for Silver futures higher as traders braced for potential disruptions. However, reports that Trump would delay new tariffs helped ease some of the pressure, leading to a reduction in premiums.

On Tuesday night, President Trump announced plans to impose 25% tariffs on imports from Canada and Mexico, as well as duties on the European Union. He also expressed his intention to impose 10% tariffs on Chinese imports starting Feb. 1, citing concerns over fentanyl shipments from China to Mexico and Canada, according to Reuters.

In response, Chinese Vice Premier Ding Xuexiang warned on Tuesday of the potential consequences of a trade war, saying that there are "no winners" in such a conflict. His comments come as China braces for possible new tariffs under the Trump administration, as reported by CNBC. (AL)

Source: FXstreet