Silver Price Forecast: XAG/USD rises to near five-month highs, $33.50 level
- Silver price climbs to a near five-month high of $33.40, last seen on February 14.
- Demand for the safe-haven metal strengthens amid escalating trade tensions and growing fears of a potential US recession.
- Silver also gains momentum as softer US inflation data fuels speculation of the Fed delivering further rate cuts soon.
Silver price (XAG/USD) continues its upward momentum for the third consecutive session, hovering around $33.30 per troy ounce during Asian trading hours on Thursday. The precious metal benefits from growing safe-haven demand amid escalating trade tensions and mounting concerns over a potential United States (US) recession.
Trade tensions intensified after US President Donald Trump imposed higher tariffs on steel and aluminum imports, heightening economic uncertainty and boosting Silver’s appeal as a safe-haven asset. Trump also described the economy as being in a "transition period," signaling a possible slowdown. Investors interpreted his comments as an early warning of potential economic turbulence ahead.
The non-interest-bearing commodities including Silver gained traction as the US inflation cooled more than anticipated in February, raising speculation that the Federal Reserve (Fed) might cut interest rates sooner than expected.
US monthly headline inflation slowed to 0.2% in February from 0.5% in January, while core inflation eased to 0.2%, below the forecasted 0.3%. On an annual basis, headline inflation declined to 2.8% from 3.0%, while core inflation slipped to 3.1% from 3.3%. Market participants are now awaiting Thursday’s US Producer Price Index (PPI) data and weekly jobless claims for further economic cues.
Additionally, demand for dollar-denominated Silver could rise as the US Dollar (USD) remains under pressure due to cooling inflation. A weaker Greenback makes commodities more affordable for foreign buyers. At the time of writing, the US Dollar Index (DXY), which measures the USD against six major currencies, remains steady around 103.50.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
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