Silver Price Forecast: XAG/USD reaches fresh 14-year highs above $48.50
- Silver price gains ground due to the ongoing US government shutdown.
- The non-yielding Silver receives support from rising odds of further Fed rate cuts.
- Fed Governor Miran reaffirmed his view that the central bank has considerable room to lower rates toward a neutral level.
Silver price (XAG/USD) marks a fresh 14-year high of $48.59 during the Asian hours on Monday. The price of the safe-haven Silver gains ground due to the ongoing United States (US) government shutdown. Traders adopt caution after US Senators failed to pass spending proposals to reopen the federal government for a fourth time, extending the ongoing shutdown into a new week.
The government shutdown has postponed key economic data, including September’s Nonfarm Payrolls report, forcing investors to rely on alternative indicators that point to a softening labor market and strengthen expectations of an imminent rate cut.
The non-interest-bearing Silver attracts buyers amid an increased likelihood of the US Federal Reserve (Fed) delivering rate cuts in the upcoming meetings. The CME FedWatch Tool suggests that markets are now pricing in a 95% chance of a Fed rate cut in October and an 84% possibility of another reduction in December. Traders are also awaiting comments from Fed Governor Stephen Miran and Chair Jerome Powell later this week for further policy guidance.
Fed Governor Stephen Miran doubled down on his belief that the Fed has a lot more room to cut its way to neutral interest rates. Miran also said that “I hope we'll have the needed data by the October FOMC meeting.” “Policy has become much more restrictive this year.”
Silver price also gains ground due to 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.
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.
