Why Silver Rallied 6% Before the Trump-Xi Meetings in Beijing

Early this week, the price of silver jumped by just over 6% to reach $85.30 an ounce. This came as markets awaited the summit due to be held in Beijing between President Trump and Xi Jinping of China. We unpack why markets reacted in this way in anticipation of the first visit by a sitting U.S. president to China in almost a decade.

For starters, the summit is primarily geared toward ironing out the differences between the two major economies on matters of trade. Approximately 60% of the demand for silver comes from industrial users of the metal in the production of solar panels, semiconductor products, electric vehicles, and other products. Most of this production depends on smooth supply chains between the U.S. and China.

The summit, in itself, is therefore a positive signal for manufacturing, and that explains why the price of silver rallied as traders anticipated the talks that could further ease the trade tensions between these major powers.

Currently, a tariff truce between the two countries is set to run until November this year. The summit could result in an extension of this truce, which would be good for manufacturing and therefore support demand for silver. As demand increases due to prospects of stable manufacturing conditions, silver could see further price gains.

Another area being watched during the Beijing summit between the two leaders is policy around rare earths. Last year, Beijing threatened to impose export restrictions on critical minerals and rare earths to U.S. firms in retaliation for Washington’s aggressive tariffs against China. Those threats rattled the manufacturing sector across the world. If the summit results in the easing of such export restrictions, the global manufacturing sector could heave a sigh of relief and return to a measure of normalcy.

Discussions on the technology sector are another aspect to watch during the summit. America has implemented restrictions on AI and advanced technology transfers to China as the two wrestle for global tech dominance. Prices are high because of those tensions in the tech sector, and a summit outcome that eases the flow of tech between the two economies would boost the tech industry and silver because an increasing amount of silver is being used in AI data centers and other tech applications.

As you can see, a lot is riding on the outcome of those talks in Beijing, and the market for silver could be strongly impacted by any agreements reached or not reached. However, the bigger picture is that silver has seen supply deficits for six years in a row, and those supply shortages are likely to cushion any pullback that may result from disappointing outcomes from the Beijing summit.

All stakeholders, such as New Pacific Metals Corp. (NYSE American: NEWP) (TSX: NUAG), will be following any press briefings that the two leaders make as the summit progresses in order to analyze how the market for silver could be impacted in the short- to medium-term by any decisions reached.

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