Silver Price Forecast: XAG/USD remains above $47.00 amid increased safe-haven demand

Silver price reached a new high of $47.57 on Wednesday.
A non-yielding Silver gained as recent US jobs data boosted expectations of further Fed rate cuts.
US federal government funding will lapse at 04:00 GMT on Wednesday, triggering a government shutdown.

Akhtar Faruqui FXStreet

Silver price (XAG/USD) holds more than 1% gains, trading around $47.15 per troy ounce at the time of writing. The price of the grey metal marked a fresh high of $47.57 during the early Asian hours on Wednesday. The price of the non-interest-bearing Silver gains ground as recent United States (US) jobs data increased the odds of Federal Reserve (Fed) rate cuts.

The latest Job Openings in the US showed the labor market is slowing, yet vacancies rose from 7.21 million to 7.23 million in August. Meanwhile, the hiring rate edged down to 3.2%, the lowest level since June 2024, while layoffs remained at a low level.

The dollar-denominated Silver attracts buyers as the US Dollar (USD) struggles amid rising expectations of further Fed rate cuts. The CME FedWatch Tool suggests that markets are now pricing in nearly a 97% chance of a Fed rate cut in October and a 76% possibility of another reduction in December.

The US Dollar Index (DXY), which measures the value of the Greenback against six major currencies, is remaining subdued around 97.80 at the time of writing. Traders will likely observe the United States (US) ADP Employment Change and ISM Manufacturing PMI data for September later in the day.

Silver price receives support from increased safe-haven demand amid concerns over a looming US government shutdown. US federal government funding is set to expire at 04:00 GMT on Wednesday, with around 750,000 federal employees facing furlough after Congress failed to pass funding bills. The US Labor Department said Monday that its statistics agency would suspend data releases, including Friday’s closely watched monthly jobs report, if a partial shutdown occurs.

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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