Silver Price Forecast: XAG/USD maintains position above $36.50 near 13-year highs
- Silver price remains close to a 13-year high of $36.89, which was marked on Monday.
- The safe-haven Silver may struggle amid easing US-China trade tensions.
- Officials from the US and China reached potential resolutions but are awaiting approvals from their leaders.
Silver price (XAG/USD) holds ground after registering over a 0.50% loss in the previous session, trading around $36.60 per troy ounce during the Asian hours on Wednesday. The price of the grey metal maintains a position near a 13-year high of $36.89, which was reached on Monday. The US Consumer Price Index (CPI) data will be closely watched later in the North American session, with expectations of a 2.5% year-over-year (YoY) rise in May.
However, precious metals, including Silver, may face challenges due to dampened safe-haven demand amid easing trade tensions between the United States (US) and China. On Tuesday, US Commerce Secretary Howard Lutnick indicated potential resolutions with China. Lutnick also said that both countries have reached a framework to implement the Geneva Consensus.
US negotiators also expect the issues around shipments of rare earth minerals and magnets will be resolved with the framework implementation. While China’s Vice Commerce Minister Li Chenggang called the communication with the US counterparts rational and candid, he will report on a framework to Chinese leaders. Officials from both sides will seek approval from their leaders before implementation.
On Tuesday, in its twice-yearly Global Economic Prospects report, the World Bank downgraded its global growth forecast for 2025 by 0.4% to 2.3%, highlighting that higher tariffs and heightened uncertainty posed a significant threat for nearly all economies. The global lender slashed its forecasts for nearly 70% of all economies.
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.
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.
