Silver Price Forecast: XAG/USD falls to near $116.50 after hitting fresh all-time highs

Silver prices retreat after touching a fresh record high of $120.46 on Thursday.
Safe-haven demand rose after Trump urged Iran to resume nuclear talks, warning any future US strike would be far harsher.
Silver demand stayed strong as USD strength faded, highlighting hedging against currency risks.

Akhtar Faruqui FXStreet

Silver price (XAG/USD) pulls back after hitting a fresh record high of $120.46, trading around $116.60 per troy ounce during the European hours on Thursday. Silver price surged on increased safe-haven demand, which could be attributed to the geopolitical tensions and the political situation in the United States (US).

US President Donald Trump urged Iran to resume nuclear talks, warning any future US strike would be far more severe. Tehran threatened retaliation against the US, Israel, and their allies.

Reuters cited Marex analyst Edward Meir, who said rising US debt and uncertainty from a global trade system fragmenting into regional blocs are prompting investors to shift away from a US-centric model and increase holdings of precious metals.

Traders are increasingly concerned about the US Federal Reserve’s (Fed) independence as the Trump administration pursues a criminal investigation into Chair Jerome Powell, seeks to remove Fed Governor Lisa Cook, and prepares to nominate Powell’s replacement in May, raising uncertainty over future monetary policy credibility.

Investor demand for precious metals, including silver, remained firm as the US Dollar’s (USD) strength fades, underscoring strong hedging demand against currency risks. US Treasury Secretary Scott Bessent reaffirmed the strong-dollar policy, while the Fed held rates steady in January, citing elevated inflation and resilient growth.

Chair Jerome Powell noted moderating job gains and a stabilising unemployment rate, saying the Fed is well-positioned to assess data on a meeting-by-meeting basis without a preset rate path.

Silver FAQs

Why do people invest in Silver?

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.

Which factors influence Silver prices?

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.

How does industrial demand affect Silver 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.

How do Silver prices react to Gold’s moves?

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.

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