Silver price forecast: XAG/USD moves below $38.00 amid easing geopolitical risks
- Silver price struggles as geopolitical concerns ease, driven by hopes of a possible end to the Ukraine-Russia war.
- President Trump announced that meet Russian President Vladimir Putin in Alaska on August 15.
- The non-interest-bearing Silver may receive support as the Fed is expected to deliver multiple rate cuts in 2025.
Silver price (XAG/USD) depreciates after registering gains in the previous two sessions, trading around 38.00 per troy ounce during the early European hours on Monday. The safe-haven Silver attracts sellers amid easing geopolitical risks.
US President Donald Trump announced on Friday that he will meet Russian President Vladimir Putin in Alaska on August 15 to negotiate an end to the war in Ukraine, a move that could potentially prevent further US sanctions on Moscow, per BBC. Traders also await further development on whether the August 12 deadline for the US-China tariff truce will be extended.
The appeal for non-interest-bearing Silver may increase due to rising odds of the Federal Reserve (Fed) delivering multiple rate cuts by the end of this year. The higher Initial Jobless Claims and lower July’s Nonfarm Payrolls in the United States (US) have boosted the expectations for a Fed rate cut next month, with another possible move in December. Markets are now pricing in approximately 89% odds of a Fed rate cut at the September meeting, up from 80% a week ago, according to the CME FedWatch tool.
Moreover, Fed Governor Michelle Bowman stated on Saturday that three interest rate cuts are likely to be appropriate this year. St. Louis Fed President Alberto Musalem noted on Friday that US economic activity remains stable but warned of potential risks ahead, noting the Fed could fall short on both its inflation and employment goals, with particular downside risks to jobs.
Tuesday will likely release US consumer inflation data, followed by the preliminary UK Q2 GDP print and the US Producer Price Index (PPI) due on Thursday will be eyed to gain further impetus of the United States (US) economic conditions.
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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