Silver Price Forecast: XAG/USD retreats toward 117.50 after hitting record highs

Silver hit a record $119.42, driven by strong safe-haven demand amid economic and geopolitical uncertainty.
Investor demand for Silver stayed strong despite a firmer USD, reflecting continued hedging against currency risks.
Safe-haven demand for Silver strengthened amid global trade frictions and elevated geopolitical risks.

Akhtar Faruqui FXStreet

Silver price (XAG/USD) continues its winning streak that began on January 22, trading around $117.70 per troy ounce during the Asian hours on Thursday. Silver price surged to a fresh record high of $119.42 earlier, supported by persistent safe-haven demand amid economic and geopolitical uncertainty. The grey metal has climbed more than 65% so far this month.

Investor appetite for precious metals, including Silver remained strong despite a rebound in the US Dollar (USD), highlighting robust hedging demand against currency risks. US Treasury Secretary Scott Bessent reiterated the US commitment to a strong dollar policy, while the Federal Reserve left interest rates unchanged at its January meeting, citing still-elevated inflation and resilient economic growth.

Fed Chair Jerome Powell said job gains have cooled and the unemployment rate is stabilising, adding that the Fed is “well positioned” to assess data meeting by meeting and is not on a preset path for future rate decisions.

Safe-haven demand for precious metals, including Silver, strengthened against the backdrop of global trade frictions. Renewed protectionist rhetoric ahead of the US election has heightened concerns over tariffs, supply-chain disruptions, and inflationary pressures. Market sentiment was further dampened by fears of a potential US government shutdown, which could delay key economic data releases.

Geopolitical risks remained elevated amid escalating Middle East tensions. US President Donald Trump urged Iran on Wednesday to return to negotiations over its nuclear programme, warning that any future US attack would be far more severe. Tehran responded by threatening retaliation against the US, Israel, and their allies, per Reuters.

At the same time, solid industrial demand from renewable energy and electronics sectors continued to tighten supply, reinforcing Silver’s upward momentum. Prices have also been supported by investors seeking cheaper alternatives to Gold, alongside supply constraints and momentum-driven buying.

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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