Silver Price Forecast: XAG/USD climbs above $74.00 amid Fed cut bets, safe-haven demand
- Silver price gains ground amid expectations of two more Fed rate cuts in 2026.
- The demand for dollar-denominated Silver strengthened amid a softer US Dollar.
- The safe-haven metal remains supported amid elevated geopolitical tensions.
Silver price (XAG/USD) rises to near $74.10 per troy ounce during the early European hours on Friday. The price of the grey metal surged 148% in 2025, breaking key levels amid its designation as a critical US mineral, tight supply, low stockpiles, and rising industrial and investment demand.
The non-interest-bearing Silver attracts buyers due to dovish sentiment surrounding the Fed policy outlook. Lower interest rates could reduce the opportunity cost of holding Silver. Traders expect the Federal Reserve (Fed) to deliver two more rate cuts in 2026.
Additionally, Silver prices find support as a softer US Dollar (USD) makes the dollar-denominated metal cheaper for foreign buyers. Markets are bracing for US President Donald Trump to nominate a new Fed chair to replace Jerome Powell when his term ends in May, a move that could tilt monetary policy toward lower interest rates.
The safe-haven metals, including Silver receive support amid heightened geopolitical tensions, fueled by recent exchanges of accusations between Russia and Ukraine over civilian attacks on New Year’s Day and persistent US–Venezuela friction.
Silver gains ground amid a surge in speculative demand in China, driving Shanghai Futures Exchange premiums to record highs. These elevated premiums reflect strong local demand and have tightened global supply chains, echoing earlier inventory squeezes in London and New York vaults.
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
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
