Silver Price Forecast: XAG/USD rises above $75.00 as Middle East tensions ease

Silver rises as Middle East de-escalation lowers oil prices, easing inflation concerns and central bank hawkishness.
Washington ended offensive operations against Iran, reaffirming the ceasefire, as Marco Rubio said objectives were achieved.
Defense Secretary Pete Hegseth said the US-Iran ceasefire holds despite Gulf clashes over the Strait of Hormuz.

Akhtar Faruqui FXStreet

Silver price (XAG/USD) rises after two days of losses, trading around $75.20 per troy ounce during the Asian hours on Wednesday. The non-yielding white metal gains ground as signs of de-escalation in the Middle East weighed on oil prices, helping to ease inflation concerns and hawkish sentiment surrounding the central banks.

Silver price has come under sustained selling pressure since the start of the conflict, as surging energy costs fueled inflation concerns and strengthened expectations that central banks may keep interest rates higher for longer or even tighten policy further.

Washington announced an end to offensive operations against Iran and reaffirmed the ceasefire, with US Secretary of State Marco Rubio stating that “Operation Epic Fury is concluded,” adding that its objectives had been achieved.

However, US Defense Secretary Pete Hegseth said on Tuesday that the ceasefire with Iran was not fully settled, as both sides continued exchanging fire in the Gulf amid tensions over control of the Strait of Hormuz.

US President Donald Trump stated that the US would temporarily pause efforts to help stranded vessels exit the Strait of Hormuz, allowing time to evaluate prospects for a deal with Iran to end the conflict. However, the blockade on ships traveling to and from Iranian ports will remain in effect.

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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