Silver jumps on safe-haven demand as US-Venezuela tensions escalate
- Silver prices rally sharply at the start of the week, supported by strong safe-haven demand.
- US military escalation in Latin America revives geopolitical concerns.
- Expectations of US rate cuts continue to underpin precious metals.
Silver (XAG/USD) jumps at the start of the week and trades around $75.10 on Monday at the time of writing, up 3.50% on the day. The white metal benefits from a strong increase in demand for safe-haven assets amid heightened geopolitical tensions, following the US military intervention against Venezuela over the weekend.
Markets react to the announcement by US President Donald Trump regarding the capture of Venezuelan President Nicolás Maduro and his wife, who have been transferred out of the country and are expected to appear in federal court. Washington has also warned that further military action remains possible if the interim authorities fail to meet US demands. This backdrop fuels concerns about prolonged regional instability and supports demand for precious metals, which are traditionally sought during periods of political and geopolitical uncertainty.
The bullish move in Silver is part of a broader trend across the precious metals complex, also supported by developments in the Gold (XAU/USD) market. Persistent tensions on multiple international fronts, combined with a risk-averse market environment, reinforce demand for defensive assets and indirectly support the white metal.
Additionally, expectations of an accommodative monetary policy in the United States (US) remain a key factor. Investors increasingly price in further interest rate cuts by the Federal Reserve (Fed) this year. Lower interest rates reduce the opportunity cost of holding non-yielding assets such as Silver, providing additional support to prices.
Market participants now turn their attention to upcoming US macroeconomic releases, starting with the ISM Manufacturing Purchasing Managers Index (PMI) later in the day. A stronger-than-expected reading could temporarily support the US Dollar (USD) and cap gains in XAG/USD. Later in the week, the Nonfarm Payrolls (NFP) report will also be closely watched to refine expectations around the future path of US monetary policy.
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.
Author
Ghiles Guezout
FXStreet
Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.
