Silver Price Forecast: XAG/USD rises to near $90.00 on US policy uncertainty
- Silver attracts safe-haven demand amid uncertainty over White House economic policies.
- President Trump signaled no easing of tariff measures in Tuesday’s State of the Union address.
- Silver’s gains may be limited as expectations for near-term Fed rate cuts continue to fade.
Silver price (XAG/USD) extends its gains for the second successive day, trading around $90.00 per troy ounce during the Asian hours on Thursday. Precious metals, including Silver, draw renewed safe-haven demand amid uncertainty surrounding the White House’s economic policies.
US President Donald Trump, in his State of the Union address on Tuesday night, offered no indication of easing tariff measures. Trump raised the newly introduced Section 122 tariffs to 10%, despite earlier threats to lift them to 15%, after the Supreme Court struck down a series of country-specific tariffs enacted under IEEPA 10 months ago.
Silver also finds support from escalating geopolitical tensions. Trump last week threatened military action against Iran if negotiations collapse. Meanwhile, Iran warned that all US military bases in the Middle East would be considered legitimate targets, putting tens of thousands of US service members at risk and heightening fears of a broader regional conflict. Investors are closely watching the third round of US-Iran nuclear talks scheduled in Geneva on Thursday.
However, gains in Silver may be capped as expectations for near-term monetary easing by the Federal Reserve (Fed) continue to fade. Chicago Fed President Austan Goolsbee said inflation progress stalled last year, stressing that inflation at 3% remains well above the Fed’s 2% target. Boston Fed President Susan Collins added that keeping interest rates steady for some time appears appropriate, citing a resilient labor market and persistent inflation risks.
Meanwhile, comments from International Monetary Fund (IMF) Managing Director Kristalina Georgieva reflect a cautiously dovish tone. Georgieva noted that US goods inflation has been partly influenced by tariffs and suggested that lowering the federal funds rate toward 3.25%–3.5% would be consistent with a return to full employment. At the same time, she emphasized that placing US public debt on a sustainable downward path will require decisive fiscal action.
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
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.
