Silver Price Forecast: XAG/USD slips below $54.00 amid easing safe-haven demand
- Silver prices face headwinds after US President Donald Trump ruled out immediate military strikes against Iran.
- Potential post-election strikes, Iranian retaliation risks, and ongoing Houthi attacks in Saudi Arabia keep geopolitical anxiety active.
- Markets price in a 90.6% chance of a Fed rate pause in October.
Silver price (XAG/USD) declines after opening at a bullish gap, trading around $53.70 per troy ounce during Asian hours. Silver price falls as safe-haven demand eases after US President Donald Trump ruled out immediate military action against Iran. Speaking to Al Jazeera, Trump stated, “There will not be a strike today.” However, market anxiety persists over the possibility of strikes resuming after this week’s Israeli elections and next week’s US midterm elections, with reports indicating Iran is prepared to retaliate by targeting Israel and the UAE.
Meanwhile, regional tensions remain elevated in the Arabian Peninsula. Yemen's Houthis declared on Sunday that they will continue targeting Saudi Arabia's King Khalid Airport in Riyadh, according to Reuters. This announcement arrived just hours after Saudi officials reported that flight operations had resumed. Hostilities escalated over the weekend as the Houthis claimed responsibility for attacks on both the airport and Saudi oil facilities on Saturday, while Saudi Arabia confirmed it intercepted additional incoming missiles and drones on Sunday while restoring partial airport operations.
The broader Middle East conflict continues to push up global energy prices, reinforcing inflation concerns and solidifying expectations for higher interest rates. Elevated interest rate expectations typically create headwinds for non-yielding assets, including Silver and other precious metals.
Traders are focusing on the upcoming Federal Reserve policy decision. The central bank is widely expected to hold interest rates steady before potentially pursuing a rate hike in December. According to the CME FedWatch Tool, market pricing reflects a 90.6% probability of a rate pause at the October 27–28 policy meeting, alongside a 79.7% chance of an increase in December.
CTA selling pressure pushes gold toward key support
According to strategists at TD Securities, "CTAs have been heavy sellers of gold, with prices now reaching key support levels," underscoring the extent of systematic selling that has recently weighed on the 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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