|

Silver Price Forecast: XAG/USD remains subdued near $76.00 due to US-Iran uncertainty

  • Silver falls due to rising expectations of a hawkish Federal Reserve stance.
  • Fed officials are abandoning rate cuts and considering hikes if inflation fails to cool.
  • Traders remain cautious over inflation risks and interest rate outlooks amid ongoing US-Iran peace negotiations.

Silver price (XAG/USD) declines after two days of gains, trading around $76.10 per troy ounce during the Asian hours on Friday. The non-yielding white metal struggles amid rising odds of hawkish sentiment surrounding the Federal Reserve (Fed) policy stance.

Elevated energy prices linked to the Strait of Hormuz threaten to feed into core US consumer prices and inflation expectations, which could potentially push the Fed to keep interest rates higher. Furthermore, a stronger US economic growth outlook is adding weight to the case for monetary tightening and putting pressure on non-interest-bearing assets, including Silver.

Fed officials remain cautious as they evaluate whether to adjust short-term interest rates. While they are currently holding the federal funds rate steady, policymakers are moving away from the idea of rate cuts and are increasingly open to raising rates if inflation fails to cool down.

US-Iran peace negotiations kept investors cautious over inflation risks and the outlook for interest rates. US Secretary of State Marco Rubio noted there were some encouraging signs surrounding a possible deal with Iran, adding that Pakistani mediators are expected to visit Tehran while Iranian officials review Washington’s latest proposal.

Meanwhile, senior Iranian officials clarified that no deal has been officially reached with the United States, but they acknowledged that the gaps between the two nations have narrowed. However, according to Reuters, the Islamic Republic’s Supreme Leader, Mojtaba Khamenei, stated that Iran’s uranium enrichment and Tehran’s control over the Strait of Hormuz remain major sticking points in the negotiations.

Iran is reportedly negotiating with Oman to implement a permanent toll system to formalize its authority over shipping traffic in the Strait of Hormuz, a proposal that President Donald Trump has firmly rejected.

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

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.

More from Akhtar Faruqui
Share:

Editor's Picks

GBP/USD keeps the firm tone above 1.3600

GBP/USD clings to its daily gains, although it gives back some of them and recedes toward the 1.3630-1.3620 band on Thursday. Cable’s uptick comes despite the modest bounce in the Greenback, while investors gear up for key data releases on the UK calendar on Friday.

EUR/USD treads water near 1.1670

EUR/USD gives away all its initial gains and receded to the sub-1.1700 region. The US Dollar’s late recovery has dragged the pair lower, leaving it practically unchanged following the NA session on Thursday. In the meantime, investors gear up for the release of preliminary S&P Global Manufacturing and Services PMIs on both sides of the Atlantic on Friday.

Gold consolidates above $4,500 as rising bond yields offset reduced Fed hike bets

Gold holds steady above $4,500 during the Asian session on Friday amid a combination of diverging forces. Reduced Fed rate-hike bets keep US Dollar bulls on the back foot and support the non-yielding bullion. However, higher US bond yields, bolstered by inflation risks stemming from volatile oil prices due to the US-Iran standoff, could limit USD losses and cap the commodity. Nevertheless, XAU/USD remains on track to register gains for the third straight week.

Bitcoin demand turns positive across spot and perpetual markets as price rebounds above $70K
Bitcoin (BTC) demand has turned positive across both spot and perpetual futures markets for the first time since its October 2025 all-time high, according to CryptoQuant founder Ki Young Ju on Thursday. The shift comes as Bitcoin rebounded past $70,000 over the past 24 hours.
Why long bonds have repriced the cost of money
The 30-year Treasury is 12 basis points below its highest level since before the financial crisis. Not its highest since 2023, or since the tightening cycle, but since June 12, 2007, the last time the longest bond in the world's deepest market yielded what it yields on Thursday. Getting there took two attempts and most of the year.
$20 billion offered, $2 billion taken: Why Treasury doubled its buyback cap

The US Treasury moved off its own calendar on Wednesday, and that is the part worth sitting with. At 12:32 GMT, the department said it would at least double the size of liquidity support buyback operations in the 10-year to 20-year and 20-year to 30-year sectors, lifting the maximum from $2 billion per operation to at least $4 billion, effective September 9 and running to November 4.