Silver Price Forecast: XAG/USD holds above $29.50 amid tariff uncertainty
- Silver price drifts higher to near $29.85 in Wednesday’s Asian session.
- Trump’s tariff uncertainty and fears of global recession boost the safe-haven flows, supporting the Silver price.
- The FOMC Meeting Minutes Will take center stage later on Wednesday.
The Silver price (XAG/USD) recovers some lost ground to around $29.85 during the Asian trading hours on Wednesday. Analysts believe the recent correction could be a setup for a strong rebound amid rising trade tensions and recession fears. Traders brace for the FOMC Minutes, which are due later on Wednesday.
US President Donald Trump said late Tuesday that he wasn’t considering a pause on his plan to impose sweeping additional tariffs on dozens of countries despite contact from trade partners seeking to avoid the levies. However, he hinted that he could be open to some negotiations.
Trump's remarks came after his top officials sent signals about the administration's willingness to engage with trade partners, with a 10% tariff already in place and targeted retaliatory import tariffs scheduled for Wednesday. This uncertainty has spurred global market volatility and boosted the safe-haven demand, supporting the Silver price.
Additionally, industrial demand, especially from new-age industries like EVs and solar energy, provides some support to the white metal. Gains are also expected in the consumer electronics market, as the development of artificial intelligence systems will continue to boost product offerings.
Traders will keep an eye on the FOMC Meeting Minutes on Wednesday. This report could offer insight into the Federal Reserve’s (Fed) stance on monetary policy. Any hawkish remarks from the Fed officials could lift the Greenback and weigh on the USD-denominated commodity price in the near term.
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.
Traders will keep an eye on the FOMC Meeting Minutes on Wednesday. This report could offer insight into the Federal Reserve’s (Fed) stance on monetary policy. Any hawkish remarks from the Fed officials could lift the Greenback and weigh on the USD-denominated commodity price in the near term.
Author
Lallalit Srijandorn
FXStreet
Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.
