Silver Price Forecast: XAG/USD rises above $33.00, receives support from safe-haven demand
- Silver price appreciates as safe-haven demand counterbalances commodities’ concerns.
- Trump's “One Big Beautiful Bill” passed the US House of Representatives and is now headed to the Senate floor.
- US debt and tariff concerns undermined the Silver demand in the photovoltaic industry.
Silver price (XAG/USD) edges higher after registering losses over 1% in the previous session, hovering around $33.10 per troy ounce during the Asian trading hours on Friday. The manufacturing-sensitive commodities, including Silver, faced challenges due to growing concerns regarding the increase in the fiscal deficit in the United States (US). However, rising safe-haven demand over these fiscal concerns could offset the demand-related threat surrounding such commodities.
On Thursday, US President Donald Trump's “One Big Beautiful Bill” passed the US House of Representatives and is on its way to the Senate floor. The US House of Representatives approved Trump’s budget by one vote. The proposal is expected to increase the deficit by $3.8 billion, as it would deliver tax breaks on tip income and US-manufactured car loans, according to the Congressional Budget Office (CBO).
Silver attracts sellers as uncertain US economic conditions, along with tariff concerns, undermine strong momentum for the photovoltaic industry. Silver is used in various industrial applications, such as electronics, solar panels, and automotive components.
In the first quarter of 2025, China's wind and solar capacity rose to nearly 1,500 GW due to a 60GW jump in photovoltaic power. Given China's status as one of the world's largest manufacturing hubs, the country's industrial demand for Silver is significant. Moreover, solar power output in Europe also surged by 30% annually in the first quarter.
Moody’s downgraded the US credit rating from Aaa to Aa1 and predicted that US federal debt is expected to climb to around 134% of GDP by 2035, up from 98% in 2023, with the budget deficit expected to widen to nearly 9% of GDP. This deterioration is attributed to rising debt-servicing costs, expanding entitlement programs, and falling tax revenues.
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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