Silver Price Forecast: XAG/USD hovers around $47.50 as safe-haven demand increases

Silver price maintains its position near the fresh 14-year high of $47.83 marked on Wednesday.
The safe-haven Silver gains after the US government shutdown put thousands of federal jobs at risk.
The non-interest-bearing Silver draws buyers as labor market weakness fueled expectations of further Fed rate cuts.

Akhtar Faruqui FXStreet

Silver price (XAG/USD) hovers near a new 14-year high of $47.83 reached on Wednesday, trading around $47.50 per troy ounce during early European hours on Thursday. Silver prices may appreciate further amid increased safe-haven demand following the United States (US) government shutdown. The shutdown put thousands of federal jobs at risk after partisan divisions blocked Congress and the White House from reaching a funding agreement.

The US Bureau of Labor Statistics has paused virtually all activity, which may cause the delay of the September US Nonfarm Payrolls (NFP) report due on Friday. Meanwhile, the US ADP Employment Change report, released on Wednesday, showed that private sector payrolls declined by 32,000 in September, while annual pay growth was 4.5%. This figure followed the 3,000 decrease (revised from a 54,000 increase) reported in August and came in below the market expectation of 50,000.

The non-interest-bearing Silver attracts buyers as the labor market weakness boosts bets on further Federal Reserve (Fed) rate cuts. The CME FedWatch Tool suggests that markets are now pricing in a 99% chance of a Fed rate cut in October and an 87% possibility of another reduction in December.

Silver price also draws support from supply concerns, as the Silver Institute projected a global market deficit for the fifth consecutive year in 2025, with output forecast at 844 million ounces, around 100 million ounces below demand. Additionally, India doubled its imports of precious metals, including Silver, in September from August, as banks and jewellers rushed to build inventories ahead of festivals and to avoid higher import taxes, Reuters trade and government sources.

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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