Silver Price Forecast: XAG/USD holds gains near $72.00 due to Middle East peace hopes

Silver gains support as easing oil prices reduce inflation concerns and expectations for central bank rate hikes.
Iranian officials are reviewing the US proposal but signaled no willingness to engage in talks with Washington.
TD Securities strategists say the Fed faces mixed signals as the Iran conflict drives an oil shock.

Akhtar Faruqui FXStreet

Silver price (XAG/USD) gains ground after registering small losses in the previous day, trading around $71.50 during the Asian hours on Thursday. Non-interest-bearing Silver finds support as easing oil prices, driven by hopes of Middle East de-escalation, reduce inflation concerns and rate hike expectations.

The White House said talks remain ongoing, with the Trump administration reportedly sending a 15-point proposal to Iran via Pakistan to resolve the conflict. Senior Iranian officials are reviewing the US proposal but have signaled no willingness to engage in talks with Washington. However, Tehran indicated it would reject a US ceasefire offer, instead proposing a five-point plan that includes sovereign control over the Strait of Hormuz.

Traders remain cautious as conflicting statements from the US and Iran over potential peace talks continue to unsettle financial markets. The US has also ordered the deployment of thousands of troops to the Middle East, heightening concerns over a possible ground invasion.

Silver has come under significant selling pressure this month as surging energy prices, driven by disruptions linked to the Iran war, fueled inflation fears and prompted a hawkish shift among major central banks.

TD Securities strategists Oscar Munoz and Eli Nir note that the Federal Reserve (Fed) faces mixed signals as the Iran conflict triggers an oil shock. They add that the US economy remains uneven, with the dual mandate still in tension, and expect the Fed to remain on hold in the near term before potentially cutting rates later in 2026 if conditions permit.

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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