Silver Price Forecast: XAG/USD slips below $68.50 despite revived debasement trading
- Silver may regain ground due to doubled US bond buybacks and potential $1 trillion Treasury account spending.
- Industrial demand from solar panels, electric vehicles, and AI data centers continues to provide fundamental backing.
- Robust industrial consumption in green tech, solar panels, EVs, and AI infrastructure could support Silver prices.
Silver price (XAG/USD) extends its losses for the second successive day, trading around $68.40 per troy ounce during the European hours on Tuesday. However, Silver may regain ground as US government interventions in the bond market revive the debasement trade. The momentum stems from the US Treasury’s announcement that it will double its buyback operations for longer-dated bonds. Reports indicate that Secretary Bessent could utilize up to $1 trillion from the Treasury General Account to finance these repurchases, a move capable of significantly altering market liquidity and Treasury yields.
However, market participants speculate that these intervention measures might offer only a temporary solution. The aggressive buyback strategy has renewed broader concerns regarding the risks of an escalating US debt crisis, persistent inflation, and potential dollar weakness.
Beyond macroeconomic and monetary factors, Silver may draw fundamental support from robust industrial consumption. Demand remains particularly strong across key growth sectors, driven by the green energy transition, photovoltaic solar panel production, electric vehicles, and expanding artificial intelligence data center infrastructure.
Silver prices could track the expected upward momentum in gold. Commerzbank notes that safe-haven demand for Gold is being reinforced by a further escalation in US sanctions policy toward Iran. The bank highlights that the US has "expanded sanctions targeting Iran's oil revenues, shipping, aviation, technology, gold and digital assets, while putting third-party countries that continue doing business with Iran on notice for potential secondary sanctions." In Commerzbank’s view, this broadening of the sanctions net adds to the prevailing geopolitical and fiscal uncertainty that has recently supported Gold prices.
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.
