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• Silver shoots higher after US President Trump accuses China of violating its trade agreement.
• The US Dollar plunges as tariff fears weigh on sentiment, supporting the XAG/USD.
• Silver prices advance above the 10-day SMA, climbing over 3% at the time of writing.

Silver (XAG/USD) is shining brightly on Monday, with prices rallying in response to a weaker US Dollar (USD). With the white precious metal trading over 3% higher on the day, prices have moved above the 10-day Simple Moving Average (SMA), providing support at $33.28 at the time of writing.

Market sentiment and the general mood soured over the weekend, after the US President Donald Trump accused China of violating the temporary trade agreement reached in Geneva on May 12.

In a post released on Truth Social, Trump stated that "China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!" 

Although little context was provided, a Reuters article suggested that the frustration appears to stem from China's lack of progress in fast-tracking the development of its rare earth minerals.

According to a report by Reuters on Friday, top global automotive leaders are warning about a looming shortage of rare-earth magnets, which are sourced from China. These magnets are essential components in various automotive applications, including windshield-wiper motors and anti-lock braking systems. This shortage could lead to the shutdown of car manufacturing plants in the near future.

On Thursday, Treasury Secretary Scott Bessent stated during an appearance on Fox News Channel that US trade negotiations with China were "a bit stalled" and that completing a deal would likely require direct engagement from both President Trump and Chinese President Xi Jinping.

The renewed tensions and market jitters tend to boost demand for safe havens, such as Gold and Silver, while reducing demand for risk-sensitive assets.

Silver daily chart

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