Silver Price Forecast: XAG/USD holds losses near $65.50 amid Fed hawkish outlook
- Silver weakens as rising inflation concerns reinforce hawkish central bank outlooks.
- Trump gave Iran 48 hours to reopen Hormuz or face strikes on energy infrastructure.
- Traders are increasingly betting on a potential Fed rate hike toward year-end.
Silver price (XAG/USD) extends its losing streak for the fifth successive session, trading around $65.60 per troy ounce during the Asian hours on Monday. The non-interest-bearing Silver loses its shine as the ongoing Middle East conflict surges oil prices that continue to fuel inflation concerns and reinforce a hawkish stance among major central banks.
US President Donald Trump has reportedly issued Iran a 48-hour ultimatum to reopen the Strait of Hormuz or face potential strikes on its energy infrastructure. Moreover, reports suggest Washington is considering a ground operation to seize Iran’s Kharg Island, a key oil export hub.
Iran’s Islamic Revolutionary Guard Corps (IRGC) warned it would fully shut the strait if the US proceeds, while Tehran threatened to target US and Israeli assets across the region, including energy, IT, and desalination facilities.
Reuters reported that Saudi Aramco, the world’s largest oil exporter, has cut crude shipments to Asian buyers for a second straight month in April as the US-Israel conflict with Iran disrupts flows through the Strait of Hormuz. Supplies are being limited to Arab Light crude shipped from the Red Sea port of Yanbu, tightening feedstock availability for Asian refiners and capping output.
Meanwhile, traders are ramping up bets on a potential Federal Reserve (Fed) rate hike toward year-end amid concerns over persistent inflation. The ECB, BOE, and BOJ also left rates unchanged last week but signaled they stand ready to tighten policy further if inflation pressures persist.
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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