Silver Price Forecast: XAG/USD slips below $89.50 as safe-haven demand fades
- Silver price pulled back after hitting a fresh record high of $93.90 on Thursday.
- Safe-haven Silver loses ground after President Trump said reports suggest Iran’s crackdown killings are easing and no mass executions are planned.
- Trump refrained from new tariffs on critical mineral imports, easing trade tensions.
Silver price (XAG/USD) retreated after reaching a fresh record high of $93.90 during Asian hours earlier, currently trading around $89.40 per troy ounce, down by more than 4% during the European hours on Thursday. The grey metal retreated amid easing geopolitical concerns.
US President Donald Trump said reports suggest Iran’s crackdown-related killings are easing and that no mass executions are planned, while adding that the US would continue monitoring the situation and did not rule out possible military action.
The non-interest-bearing Silver remains under pressure as a stronger-than-expected United States (US) Producer Price Index (PPI) and Retail Sales, along with last week’s easing Unemployment Rate, reinforce expectations that the Fed will keep rates on hold in the coming months. Traders will likely monitor the weekly US Initial Jobless Claims and Philadelphia Fed Manufacturing Survey later on Thursday.
The US Census Bureau reported on Wednesday that Retail Sales rose more than expected to $735.9 billion in November, up 0.6%, following a 0.1% contraction in October and beating market expectations of a 0.4% increase. Meanwhile, the Producer Price Index (PPI) came in hot in November, with both headline and core measures reaching 3% year-over-year (YoY).
US President Donald Trump refrained from imposing new tariffs on imports of critical minerals, easing trade tensions and reducing safe-haven demand for Silver. The move avoids immediate supply disruptions and supports a firmer US dollar, keeping non-interest-bearing Silver under pressure. However, lingering policy uncertainty and strong industrial demand help limit deeper downside risks.
The safe-haven demand for precious Silver may emerge amid renewed concerns over the Fed’s independence. The Federal Reserve Chair Jerome Powell called out the Trump administration's decision to subpoena him, saying it amounted to intimidating the Fed into delivering easier monetary policy.
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.
