Silver Price Forecast: XAG/USD rises above $38.50 on rising demand
- Silver price climbs to the highest level since 2011, around $38.85 in Monday’s Asian session.
- Trump’s announcement of a 50% tariff on copper imports triggered a silver price.
- Rising industrial demand continues to support the Silver price, but the Fed’s cautious stance might cap its upside.
The Silver price ( XAG/USD) attracts some buyers to around $38.85, the highest since 2011 during the Asian trading hours on Monday. The white metal edges higher as US President Donald Trump's shock trade tariff on copper spurred a rush to import silver into the world's largest economy.
Last week, Trump said that the 50% tariff on copper imports will take effect on August 1. The decision was made after Trump received a national security assessment. It’s worth noting that Silver and copper are both used in industrial applications, especially in electronics and clean energy. If copper becomes more expensive due to tariffs, manufacturers may look for cheaper alternatives like the white metal.
Furthermore, robust industrial demand, driven by green technology applications like solar panels and EVs, combined with supply shortages might contribute to Silver’s upside. According to the industry group the Silver Institute, demand for silver is expected to remain strong in the coming years, with the market facing another year in deficit.
On the other hand, traders remained cautious as the US Federal Reserve (Fed) is widely expected to hold interest rates steady as it waits to see the impact of tariffs on price pressures. This, in turn, could underpin the US Dollar (USD) and weigh on the USD-denominated commodity price, as it makes silver more expensive for buyers using other currencies.
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
Lallalit Srijandorn
FXStreet
Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.
