Silver Price Forecast: XAG/USD remains subdued near $76.50 as Trump delays Iran strike

Silver demand fades after President Trump delayed a planned military strike on Iran, easing risk aversion.
Trump warned the US remains ready for a large-scale assault on Iran if ongoing serious negotiations fail to reach a deal.
White metal struggles as Middle East conflicts raised energy prices, fueling global inflation and fears of prolonged high interest rates.

Akhtar Faruqui FXStreet

Silver price (XAG/USD) depreciates after registering 2.36% of gains in the previous day, trading around $76.30 during the Asian hours on Tuesday. Safe-haven demand for Silver fades as risk aversion eases after US President Donald Trump announced he was delaying a planned military strike on Iran.

According to a Bloomberg report, Trump called off the Tuesday attack following appeals from Persian Gulf allies requesting more time to negotiate a diplomatic resolution. While the US administration noted it remains prepared to strike if an acceptable agreement is not reached, no firm deadline has been set.

The white metal falls as persistent inflation concerns linked to elevated energy prices due to Middle East conflicts raise the odds of prolonged higher interest rates by central banks globally.

Accelerating US inflation led traders to rule out Federal Reserve (Fed) rate cuts this year, while also boosting speculation that the Fed could still raise rates before year-end. Traders are now awaiting the latest FOMC minutes and flash US PMI data due later in the week for additional clues on the outlook for monetary policy and economic activity.

In overnight trading, the yield on the benchmark 10-year US Treasury note jumped to 4.659%, its highest level since February 2025, before retracing to sit nearly flat on the day at 4.609%. This sharp rise in yields reflects market anxieties that elevated energy costs could flow into consumer price inflation, ultimately prompting the Federal Reserve to push interest rates higher.

Market participants are also closely watching the US central bank's internal dynamics. Reuters cited Lou Brien, market strategist at DRW Trading, noting that recent market volatility stems from investors testing how newly appointed Fed Chair Kevin Warsh will handle rising inflation. Brien emphasized that Wall Street wants reassurance that Warsh will prioritize the Fed's traditional mandate and operate independently rather than bending to political pressure from the White House.

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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