Silver Price Forecast: XAG/USD rebounds above $76.50 after sharp drop, eyes on US CPI data
- Silver price rebounds to around $76.60 in Friday’s Asian session.
- The risk-off tone in equities is starting to widen, with Silver plunging sharply on what looks like algo selling.
- Traders brace for the US CPI inflation data later on Friday for fresh impetus.
Silver price (XAG/USD) recovers some lost ground to near $76.60 during the Asian trading hours on Friday. The white metal suddenly fell late Thursday, pushing silver down more than 11%. Analysts blame a sudden sell-off amid falling technology stocks and expectations that the Federal Reserve (Fed) will not cut interest rates soon.
Concerns about Artificial Intelligence (AI) spurred a sell-off across financial markets, with margin calls also likely adding to a fall in precious metals. Additionally, expectations that the US central bank would not cut interest rates in the near future following robust jobs data might weigh on a non-yielding asset such as Silver.
Financial markets are now pricing in nearly a 92% probability that the Fed will hold rates steady at its next meeting, although the odds of a rate cut at its June meeting are now at nearly 50%, according to the CME FedWatch tool.
The Silver Institute industry association said on Tuesday that global silver demand is expected to remain steady in 2026, with gains in retail investment offsetting most of the losses across industrial, jewelry, and silverware demand.
The US Consumer Price Index (CPI) inflation report will be the highlight later on Friday. This report could offer more clues about the interest rate path. The headline and core CPI are expected to show a rise of 2.5% YoY in January. In case of a softer-than-expected outcome, this could drag the US Dollar (USD) lower and lift the USD-denominated commodity price in the near term.
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
Lallalit Srijandorn
FXStreet
Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.
