Silver Price Forecast: XAG/USD advances to near $33.00 due to renewed safe-haven demand
- Silver price gains traction on the back of renewed safe-haven demand, driven by a weakening US Dollar.
- The non-yielding metal draws support from a drop in the 2-year US yield, which has declined over 1% to 3.75%.
- Investor anxiety intensified further amid escalating political tensions, following reports of Trump's growing dissatisfaction with Fed Chair Jerome Powell.
Silver price (XAG/USD) has recovered its losses registered in the previous session, trading near $32.80 per troy ounce during Monday’s European session. The recovery in the grey metal is supported by renewed safe-haven demand amid a weakening US Dollar (USD).
The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, has dropped over 1%, hovering around 98.00 — its lowest level since March 2022. The decline in the US Dollar is mirrored by a sharp drop in the 2-year US Treasury yield, which has fallen more than 1% to 3.75%.
The Greenback is under pressure due to growing concerns over the direction of US economic policy and the independence of the Federal Reserve (Fed). Investor unease deepened as political tensions further escalated last Thursday with reports suggesting Trump’s dissatisfaction with Fed Chair Jerome Powell, sparking fears of political interference in monetary policy and casting doubt on the central bank's autonomy. The White House economic adviser, Kevin Hassett confirming that the option of dismissal is being explored.
The mounting uncertainty on economic fronts has fueled demand for Silver, a traditional safe-haven asset in times of instability. Rising US-China trade tensions added to the risk-off sentiment. China pushed back against what it described as US “trade bullying,” warning other nations against yielding to pressure at its expense.
The White House implemented tariffs on Chinese vessels docking at US ports, raising concerns over potential disruptions to global shipping routes. However, by late Thursday, President Trump struck a more conciliatory tone, acknowledging that China had made several overtures. He remarked, “I don't want to go higher on China tariffs. If China tariffs go higher, people won't buy,” signaling caution over further escalation. Trump also expressed optimism, suggesting that a trade agreement between US and China could be finalized within the next three to four weeks.
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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