Silver Price Forecast: XAG/USD holds below $34.00 as traders await US Retail Sales release

Silver price loses momentum to near $33.80 in Monday’s Asian session.
Safe-haven flows and growing industrial demand might continue to support the Silver price.
Traders will take more cues from the US February Retail Sales report, which is due later on Monday.

Lallalit Srijandorn FXStreet

The Silver price (XAG/USD) edges lower to around $33.80 after reaching its highest level since October 31, 2024, during the Asian trading hours on Monday. Nonetheless, the potential downside for the white metal seems limited due to the economic uncertainty over the impact of a global trade war and a softer Greenback.

The escalating trade war between the US and many of its largest trading partners has raised concerns about the impact on economies across the world. This, in turn, might boost the safe-haven asset like the Silver. Last week, US President Donald Trump threatened a 200% tariff on any alcohol coming to the US from the European Union (EU). Trump has also raised levies on Chinese imports into the US to at least 20%.

Additionally, supply deficits and growing industrial demand could act as strong tailwinds for the white metal. According to the global investment firm WisdomTree, investors hold a significant portion of it and expect higher prices to encourage sales. Industrial demand for silver has reached all-time highs, owing to its use in photovoltaic applications, 5G technology, and automotive electronics.

Silver traders will keep an eye on the US Retail Sales report for February, which is expected to grow by 0.7% MoM. In case of a stronger-than-expected outcome, this could lift the US Dollar (USD) and weigh on the USD-denominated commodity price in the near term.

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

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.

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