Silver Price Forecast: XAG/USD climbs to near $113.50 on safe-haven appeal
Silver price jumps to around $113.50 in Wednesday’s Asian session, rising 1.30% on the day.
Economic and geopolitical uncertainties and US rate cut bets support the Silver price.
Analysts warned of a possible silver price fall.
Silver price (XAG/USD) surges to near $113.50 during the Asian session on Wednesday. The rally of the white metal is bolstered by economic and geopolitical risks, and interest rate cut expectations. The US Federal Reserve (Fed) interest rate decision will be in the spotlight later on Wednesday.
US President Donald Trump said on Tuesday that the value of the US Dollar (USD) is great when asked whether he thought it had declined too much. Losses in the US Dollar Index accelerated after Trump's comments, hitting the lowest since February 2022. This, in turn, provides some support to the USD-denominated commodity assets such as Silver.
Concerns over the Fed’s independence could boost the safe-haven demand, benefiting silver. Trump stated that he would soon announce his pick for the next Fed chair to replace Chair Jerome when his term expires in May. Betting markets pegged BlackRock Executive Rick Rieder as the front-runner, according to Reuters.
The Fed is widely expected to hold interest rates steady at its policy meeting on Wednesday, following three consecutive cuts at the end of 2025. Traders will closely watch the press conference as it might offer some hints about the US economic outlook and interest rate path.
The probability of a next rate reduction is largely priced in for the second half of 2026, most likely in June. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal.
On the other hand, profit-taking in Silver cannot be ruled out in the near term after a rise of more than 200% year-on-year. “I think silver will put in a high this year to last for years. When price shifts at such high velocity, deficits reverse,” said Mike McGlone, Senior Commodity Strategist at Bloomberg Intelligence.
Why do people invest in Silver?
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.
Which factors influence Silver prices?
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.
How does industrial demand affect Silver 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.
How do Silver prices react to Gold’s moves?
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.
The above content was completed with the assistance of AI and has been reviewed by an editor.
