Silver Price Forecast: XAG/USD trades around $43.50 near fresh 14-year highs
- Silver price reached a new 14-year high of $43.77 on Monday.
- The safe-haven Silver attracts buyers amid rising geopolitical tensions in Europe and the Middle East.
- Poland’s NATO-aligned armed forces deployed aircraft to ensure the safety of Polish airspace after Russian airstrikes.
Silver price (XAG/USD) extends its gains to mark fresh 14-year highs, trading around $43.50 per troy ounce during the European hours on Monday. The price of the precious metals, including Silver, gained ground amid rising safe-haven demand, driven by the geopolitical tensions in Europe and the Middle East.
Russia launched airstrikes targeting western Ukraine near the border with Poland, prompting Poland’s NATO-aligned armed forces to deploy aircraft on Saturday to ensure the safety of Polish airspace. Three Russian military jets also violated NATO Estonia's airspace on Friday, while Germany's air force reported that a Russian military plane entered neutral airspace on Sunday over the Baltic Sea.
On Sunday, Britain, Canada, Australia, and Portugal recognized the Palestinian state in a move aimed at advancing a two-state solution. They join over 140 nations supporting Palestinians’ bid for an independent homeland from the occupied territories. The decision could spark a furious response from Israel, as these Western countries had long been considered close allies, per Reuters.
The non-interest-bearing Silver also draws support after the Federal Reserve (Fed) delivered a 25-basis-point rate cut last week and indicated a further 50 basis points of easing before year-end, slightly above its June projections. The focus this week is on the fresh Fed commentary and the latest Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation gauge, which is expected to signal subdued price pressures.
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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