Silver Price Forecast: XAG/USD rises to near $70.50 as interest rate concerns ease

Silver advances as Friday's interim US-Iran peace agreement in Switzerland is expected to restore global oil flows.
US Vice President JD Vance stated that President Trump may release the preliminary US-Iran peace agreement ahead of schedule.
The Fed is widely expected to hold its benchmark interest rate unchanged at 3.50% to 3.75%.

Akhtar Faruqui FXStreet

Silver price (XAG/USD) continues its winning streak for the fifth consecutive day, trading around $70.40 per troy ounce during the Asian hours on Wednesday. The non-yielding metal gains ground as investors anticipate the signing of an interim United States (US)-Iran peace agreement this Friday in Switzerland.

The US-Iran pact is expected to immediately restore Iranian oil exports and secure safe passage for international tankers through the strategic Strait of Hormuz, helping to ease global anxieties surrounding energy-driven inflation and interest rates.

Diplomatic momentum has accelerated rapidly ahead of the signing. US Vice President JD Vance indicated on Tuesday that President Donald Trump might release a preliminary peace framework ahead of schedule, following the president's earlier comments that a framework had already been agreed upon. Simultaneously, Iranian Foreign Minister Seyed Abbas Araghchi confirmed that a new round of negotiations aimed at securing a final, comprehensive peace deal is set to begin in Switzerland.

Meanwhile, global market attention is shifting heavily toward Wednesday’s pivotal Federal Reserve (Fed) policy meeting. The US central bank is widely expected to maintain a cautious "wait-and-see" approach, keeping its benchmark interest rate unchanged within the 3.50%-3.75% range. Investors and traders will be closely monitoring the subsequent press conference, seeking crucial insights into how newly appointed Fed Chair Kevin Warsh intends to guide monetary policy into this next era.

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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