Silver Price Forecast: XAG/USD holds gains above $31.00 due to renewed safe-haven demand
- Silver price surged as escalating US-China trade tensions reignited safe-haven demand.
- President Trump announced an immediate tariff hike on Chinese imports to 125% shortly after China raised duties.
- China’s Consumer Price Index fell 0.1% YoY in March, missing expectations for a 0.1% increase and extending February’s 0.7% drop.
Silver price (XAG/USD) continues to climb for the second straight day, trading near $31.10 per troy ounce during Thursday’s Asian session. The grey metal surged nearly 4% in the previous session, fueled by renewed safe-haven demand following escalating US-China trade tensions.
US President Donald Trump announced an immediate hike in tariffs on Chinese imports to 125%, shortly after China raised reciprocal duties on US goods to 84%. This tit-for-tat escalation overshadowed a broader trade de-escalation effort, where the US had temporarily lowered tariffs to 10% for 90 days to facilitate negotiations with other countries.
Meanwhile, markets are digesting the latest Federal Open Market Committee (FOMC) minutes, which suggested near-unanimous concern among policymakers over the dual threat of rising inflation and slowing growth—highlighting potential “difficult tradeoffs” for the Fed.
The non-yielding Silver metal may attract fresh buying interest following the release of China’sthat Consumer Price Index (CPI) data, which reinforces dovish expectations for the People’s Bank of China (PBoC) policy outlook. China’s CPI fell 0.1% year-over-year in March, missing forecasts of a 0.1% rise and following a 0.7% drop in February. On a monthly basis, CPI declined 0.4%, steeper than both February’s 0.2% decrease and market expectations. Additionally, the Producer Price Index (PPI) slipped 2.5% year-over-year, exceeding the previous 2.2% drop and the projected 2.3% decline, signaling continued deflationary pressures in the economy.
Despite intensifying trade frictions, Fed officials emphasized a data-dependent approach to policy. The CME FedWatch tool shows that markets are currently pricing in a 40% chance of a rate cut at next month’s meeting. Investors now turn their attention to upcoming US CPI and PPI data on Friday for further clarity on the Fed’s rate path.
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.
BRANDED CONTENT
Finding a broker with low spreads can make a big difference in your trading success. Discover our top picks for low-spread brokers, each offering unique benefits to fit your strategy.
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.
