Silver Price Forecast: XAG/USD maintains position near $39.00, five-week highs

Silver price trades near a five-week high at $39.07, recorded on Friday.
The CME FedWatch Tool indicates an 87% chance of a 25-basis-point rate cut in September.
The industrial demand for Silver could increase as China’s solar cell exports rose more than 70% in H1.

Akhtar Faruqui FXStreet

Silver price (XAG/USD) halts its three-day winning streak, trading around $38.80 per troy ounce during the Asian hours on Monday. The price of the non-yielding Silver registered nearly 2% gains in the previous session amid rising likelihood of a US Federal Reserve (Fed) interest rate cut in September.

Fed Chair Jerome Powell spoke at the Jackson Hole symposium on Friday, indicating risks to the job market were rising but also noting inflation remained a threat and that a decision wasn't set in stone. Powell further stated that the Federal Reserve still believes it may not need to tighten policy solely based on uncertain estimates that employment may be beyond its maximum sustainable level.

According to the CME FedWatch tool, traders are now pricing in nearly an 87% odds of a 25 basis points (bps) rate cut in September, up from 75% before the speech. Focus will also shift to the upcoming release of the Q2 US Gross Domestic Product Annualized and July Personal Consumption Expenditures - Price Index data, the Fed's preferred inflation gauge.

China has installed over 93 gigawatts of solar capacity in May, a 300% annual surge, ahead of policy changes that will make it harder to connect new panels to the grid. Additionally, China’s solar cell exports jumped more than 70% in the first half of 2025, fueled by strong photovoltaic (PV) demand from India. Silver demand may grow as it is used in the photovoltaic cells’ conductive paste.

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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