Silver Price Forecast: XAG/USD falls below $92.00 as safe-haven demand wanes
- Silver price slumps to around $91.80 in Thursday’s Asian session, down 0.92% on the day.
- Trump eased tariff threats linked to Greenland, reducing demand for safe assets like Silver.
- The Fed is likely to leave its key rate unchanged through this quarter and possibly until Chair Powell's tenure ends in May.
Silver price (XAG/USD) tumbles to near $91.80 during the Asian trading hours on Thursday. The white metal falls after reaching record highs as traders react to easing tariff threats and profit booking.
US President Donald Trump on Wednesday withdrew a threat to impose tariffs on eight nations for their stance on Greenland, saying he had reached the outlines of a deal with NATO on the island's future. Hopes for a solution in Trump’s ambitions for Greenland dampen demand for safe-haven assets such as Silver.
"So then the announcement on the European tariffs sent the stock market higher, erased most of the gains and put some pressure on metals," said RJO Futures senior market strategist Bob Haberkorn.
Economists expect the US Federal Reserve (Fed) to hold its key interest rate until Fed Chair Jerome Powell’s term ends in May, according to Reuters. The view that the US central bank can keep interest rates higher for longer generally underpins the US Dollar (USD) and weighs on the non-interest-bearing assets like Silver.
Germany's Finance Minister Lars Klingbeil warned against premature optimism after Trump backed off threats to impose tariffs as leverage to seize Greenland. Meanwhile, US Treasury Secretary Scott Bessent stated US allies were enraged by Trump’s threats to “sit back” and “take a deep breath,” avoiding retaliation. Any signs of a renewed trade war or rising tensions between the US and Europe could boost the safe-haven flows, benefiting the white metal.
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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