Silver Price Forecast: XAG/USD rises to near $33.00 on M&A news, geopolitical tensions

Silver price found support following news that Canadian mining company Pan American Silver plans to acquire MAG Silver Corp.
Ongoing geopolitical tensions also underpinned the metal, as India issued a warning to Pakistan over recent ceasefire violations.
Silver gains may be limited by a decline in safe-haven demand, driven by growing optimism around US-China trade talks.

Akhtar Faruqui FXStreet

Silver price (XAG/USD) is extending its gains for the third consecutive session, trading around $32.90 per troy ounce during Asian hours on Monday. The precious metal drew support from news that Canadian miner Pan American Silver will acquire MAG Silver Corp in a deal valuing the company at approximately $2.1 billion, according to Reuters.

The acquisition grants Pan American Silver access to MAG’s 44% stake in the high-grade Juanicipio Silver mine in Mexico, operated by Fresnillo, which owns the remaining 56%. The deal, unanimously approved by both companies’ boards, is expected to close in the second half of 2025.

Geopolitical tensions, meanwhile, continue to lend support to Silver. India warned Pakistan of potential retaliation over recent ceasefire violations, a claim denied by Pakistan's military. Separately, Ukrainian President Volodymyr Zelenskyy expressed hope for a temporary ceasefire with Russia starting Monday, May 12, but Moscow rejected the proposal, calling instead for direct talks without preconditions.

However, gains in Silver may be capped by easing safe-haven demand amid growing optimism surrounding US-China trade relations. Over the weekend, both countries concluded productive discussions, with Beijing set to launch formal negotiations and Washington citing progress toward an agreement.

Further weighing on Silver, the Federal Reserve last week flagged inflation and labor market risks, with Chair Jerome Powell ruling out a preemptive rate cut in response to tariff-related economic concerns.

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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