Silver Price Forecast: XAG/USD rises to near $49.00 due to renewed safe-haven demand
- Silver price gains as China's RatingDog Manufacturing PMI fell to 50.6 in October from 51.2 prior.
- Safe-haven demand rises after President Trump announced plans to block China from accessing Nvidia’s top chips.
- Silver may attract buyers due to the prolonged US government shutdown.
Silver price (XAG/USD) recovers its recent losses from the previous session, trading around $48.80 per troy ounce during the Asian hours on Monday. The price of the safe-haven Silver receives support from market caution, driven by the weak Chinese private Manufacturing Purchasing Managers' Index (PMI) data and renewed US-China trade risks. Traders await the US ISM Manufacturing PMI data due later in the day.
China's RatingDog Manufacturing PMI declined to 50.6 in October from 51.2 in September. The market forecast was for a 50.9 print. Silver is essential in various industrial applications, such as electronics, solar panels, and automotive components. Given China's status as one of the world's largest manufacturing hubs, the country's industrial demand for Silver is significant.
Meanwhile, US President Donald Trump said he plans to block China from accessing Nvidia’s most advanced semiconductor technology, according to CBS News. His remarks could reignite US-China trade tensions, which had eased after his meeting with Chinese President Xi Jinping last Thursday during the APEC Summit in South Korea.
Silver may also attract buyers as safe-haven flows return due to the prolonged government shutdown, which could fuel economic concerns in the United States (US). The US government impasse has now entered its sixth week with no easy endgame in sight amid a deadlock in Congress on the Republican-backed funding bill.
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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