Silver Price Forecast: XAG/USD slips below $75.50 due to easing safe-haven demand
- Silver trims gains as easing safe-haven demand amid US–Iran talks weighs on prices.
- Donald Trump said the US will escort neutral ships through the Strait of Hormuz starting Monday.
- Iran proposed a one-month deadline for talks to reopen the Strait of Hormuz and end conflicts in Iran and Lebanon.
Silver price (XAG/USD) declines after opening at a gap up, but remains in the positive territory and trades around $75.40 per troy ounce during the Asian hours on Monday. The white metal trims its daily gains amid easing safe-haven demand, as traders evaluate progress in the United States (US)–Iran peace negotiations.
A Sunday report by Bloomberg indicated that Donald Trump said the United States will begin guiding neutral ships trapped in the Persian Gulf out through the Strait of Hormuz starting Monday. The initiative is intended to help civilian vessels from non-aligned countries exit the contested waterway and resume normal operations.
Mediation efforts to end the war have continued as the conflict in Iran enters its third month. Iran said it is reviewing Washington’s response to its latest 14-point proposal, boosting optimism for a diplomatic resolution to the conflict. Trump suggested that Tehran’s latest peace proposal may fall short of expectations, Bloomberg reported Sunday.
According to Axios, citing sources familiar with the matter, Iran has proposed setting a one-month deadline for talks aimed at reopening the Strait of Hormuz and ending both the US naval blockade and the conflicts in Iran and Lebanon.
The non-yielding Silver faced headwinds as the Middle East conflict has driven energy prices sharply higher and increased inflation risks, raising concerns that central banks may keep interest rates elevated for longer or even tighten policy further.
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.
