Silver Price Forecast: XAG/USD retreats toward $113.00 on profit-taking pressure

Silver pulled back from the January 29 record high of 121.66 as profit-taking emerged.
Silver stays on track for over 60% monthly gains as Iran’s warning keeps geopolitical risks elevated.
Silver’s safe-haven rally gained support from fading confidence in US assets amid Trump’s dollar comments and Fed criticism.

Akhtar Faruqui FXStreet

Silver price (XAG/USD) halts its seven-day winning streak, trading around 113.30 during the Asian hours on Friday. The precious metal retreated from its fresh record high of 121.66, reached on January 29, as profit-taking set in, though prices remained on track for over 60% monthly gains amid elevated economic and geopolitical uncertainty.

Geopolitical risks remained elevated after Iran warned it would “defend itself and respond like never before” following fresh threats from President Trump. Tensions escalated further as the European Union designated Iran’s Islamic Revolutionary Guard Corps a terrorist organization.

Reports also pointed to the US boosting its military presence near Iran, while Tehran announced live-fire military drills in the strategically vital Strait of Hormuz, heightening concerns over regional security.

Silver’s safe-haven rally was fueled by fading confidence in US assets after President Donald Trump downplayed the dollar’s four-year low while escalating tariff threats and criticizing the Federal Reserve (Fed).

US President Donald Trump plans to announce his choice to replace Fed Chair Jerome Powell on Friday morning. Trump said his nominee would do a “good job” and expressed a desire for rate cuts when economic growth shows strength, per Bloomberg.

The Fed, meanwhile, held interest rates steady, citing resilient economic activity and early signs of labor-market stabilization, while noting inflation remains elevated and the outlook uncertain. Markets expect the central bank to deliver its next rate cut in June.

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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