Silver Price Forecast: XAG/USD slips below $44.00 after retreating from new 14-year highs
- Silver price retreats after reaching the 14-year high of $44.12 on Monday.
- Cleveland Fed President Beth Hammack cautioned that inflationary pressures are likely to remain in place for now.
- Dozens of world leaders convened at the United Nations to voice support for a Palestinian state.
Silver price (XAG/USD) retreats after reaching new 14-year highs, trading around $43.80 per troy ounce during the Asian hours on Tuesday. The non-interest-bearing Silver declines amid a technical correction, along with several cautious statements from US Federal Reserve (Fed) officials on Monday.
Fed Bank of Cleveland President Beth Hammack warned on Monday that inflation pressures will likely persist for the time being, noting challenges on both sides of the Fed's mandate to both control inflation and support the labor market.
Richmond Fed President Thomas Barkin noted that tariff policies tend to result in higher prices for consumers, noting that the primary point of concern for businesses remains cloudy trade policy, not high interest rates.
Traders will likely observe the preliminary reading of the US S&P Global PMI reports for September later in the day. US Federal Reserve (Fed) Chair Jerome Powell will also be eyed. The focus will shift toward the latest Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation gauge, which is expected to signal subdued price pressures.
Safe-haven Silver may regain ground amid escalating geopolitical tensions in Europe and the Middle East. On Monday, NATO allies accused Russia at the United Nations (UN) of violating alliance airspace in Estonia and Poland, actions Britain warned could risk triggering armed conflict, per Reuters.
Also at the UN, dozens of world leaders voiced support for Palestinian statehood after Britain, Canada, Australia, and Portugal formally recognized it on Sunday, a landmark diplomatic shift nearly two years into the Gaza war that continues to face strong opposition from Israel and its close ally, the United States.
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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