Silver Price Forecast: XAG/USD edges higher above $36.00 on softer US Dollar, rising demand
- Silver price drifts higher to near $36.35 in Thursday’s early Asian session.
- Trump's attacks threaten Fed credibility, weighing on the US Dollar.
- Rising demand for industrial uses supports the Silver price.
The Silver price (XAG/USD) attracts some buyers to around $36.35 during the early European session on Thursday, bolstered by a weaker US Dollar (USD). Traders will take more cues from the final US Q1 GDP Growth Rate and Fedspeak later on Thursday.
The Greenback faces some selling pressure due to concerns about the future independence of the US Federal Reserve (Fed). This, in turn, provides some support to the USD-denominated commodity price, as a weaker USD makes Silver cheaper for foreign buyers. US President Donald Trump said that he is selecting Fed Chair Jerome Powell's replacement by September or October.
Furthermore, rising demand for industrial uses might contribute to silver’s upside. According to the Silver Institute, global silver demand is estimated to reach a new record in 2025, led by industrial use in photovoltaics and electronics, as well as a recovery in jewelry and silverware.
Markets have priced in the possibility of a rate cut at the Fed's next meeting in July to 25%, up from just 12% a week ago, and priced in 64 basis points (bps) of reductions by year-end, up from around 46 bps last week, according to Reuters. Traders will take more cues from the US GDP data later on Thursday. Any surprise upside in economic data could lift the US Dollar and undermine the Silver price in the near term.
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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