Silver Price Forecast: XAG/USD gains above 52.50 due to rising US data uncertainty
- Silver price gained as safe-haven demand improves on US data release uncertainty.
- Kevin Hassett cautioned that some October data may “never materialize,” as it couldn’t be collected during the shutdown.
- The non-yielding Silver may struggle as cautious Fedspeak decreased the Fed rate cut bets for December.
Silver price (XAG/USD) retraces its recent losses from the previous session, trading around $52.70 per troy ounce during the Asian hours on Friday. The attracts buyers
Safe-haven demand for precious metals, including Silver, is rising amid uncertainty over the US economic outlook, fueled by a backlog of official data after the government’s reopening. Early private-sector readings for October point to a cooling labor market, softer consumer confidence, and lingering inflation concerns.
National Economic Council Director Kevin Hassett cautioned that some October data may “never materialize,” as several agencies were unable to gather information during the shutdown. US President Donald Trump signed the government funding bill on Thursday to end the record 43-day government shutdown in US history.
The upside of the non-interest-bearing Silver could be limited as cautious remarks from Federal Reserve (Fed) officials decreased the odds of a Federal Reserve (Fed) rate cut in December. The higher interest rates push the yields higher on newly issued bonds to attract investors who are looking to earn better returns. The CME FedWatch Tool shows markets pricing in nearly a 50% chance of a 25-basis-point Fed rate cut in December, down from 69% a week ago.
Federal Reserve Bank of St. Louis President Alberto Musalem highlighted the need for caution on Thursday, noting there is limited room to ease without risking overly accommodative policy. Meanwhile, Minneapolis Fed President Neel Kashkari added that inflation remains too high at 3%.
Supply risks also supported Silver’s gains, amid concerns over possible US tariffs on the metal. Last week, the US Department of the Interior added Silver, Copper, and metallurgical Coal to its “critical minerals” list, underscoring their economic and national security importance. This classification opens the door for potential Section 232 investigations and trade measures, similar to those previously imposed on Copper.
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.
