Silver Price Forecast: XAG/USD steadies around $87.50 due to safe-haven demand

Silver may rise further on safe-haven demand amid trade uncertainty and geopolitical tensions.
Trump’s administration considers new security tariffs on six industries after the Supreme Court voided several levies.
Safe-haven demand for Silver strengthened as Middle East tensions rise after Trump signaled a possible Iran strike.

Akhtar Faruqui FXStreet

Silver price (XAG/USD) halts its four-day winning streak, trading around $87.50 per troy ounce during the Asian hours on Tuesday. However, the safe-haven metal may regain its ground amid global trade uncertainty and heightened geopolitical concerns.

The Wall Street Journal reported on Monday that US President Donald Trump’s administration is weighing new national security tariffs targeting six industries, following a Supreme Court ruling last week that invalidated several of his second-term levies. According to the report, the proposed measures would be implemented under Section 232 of the Trade Expansion Act of 1962 and would remain separate from the 15% global tariff Trump announced on Saturday.

The policy shift prompted swift signs of retaliation. The European Union (EU) signaled it may pause ratification of its trade agreement with the United States (US), while doubts persist over the durability of the new measures, as Congress is unlikely to extend them beyond the 150-day limit.

Meanwhile, India and the US have postponed a planned three-day meeting between trade negotiators aimed at finalizing the interim trade pact, as Washington recalibrates its global tariff strategy after the Supreme Court struck down the administration’s broad reciprocal duty framework.

The safe-haven demand for Silver remains stronger as geopolitical tensions in the Middle East have remained elevated for weeks after Trump suggested that a potential strike on Iran could be imminent. However, Oman confirmed that a third round of talks between Washington and Tehran will proceed this week in Geneva, easing concerns over a prolonged conflict between the two sides.

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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