Silver Price Forecast: XAG/USD trades around $64.00 after rebounding from 11-week lows

Silver rebounded after hitting an 11-week low of $61.50 on Thursday, driven by industrial demand and safe-haven appeal.
The white metal could drop as US airstrikes in Iran fuel Middle East conflict and worsen global inflation fears.
Trump threatened to strike Iran "very hard," accusing Tehran of intentionally stalling interim peace deal negotiations.

Akhtar Faruqui FXStreet

Silver price (XAG/USD) gains ground after two days of losses, trading around $64.00 per troy ounce during the Asian hours. The white metal rebounds from an 11-week low of $61.50 reached in earlier hours on Thursday, driven by a unique intersection of its dual nature as both a monetary safe-haven and a critical industrial commodity.

However, Silver faces limited upside as the US military launched a second day of airstrikes against Iran, threatening a prolonged Middle East conflict that has rattled global markets and intensified inflation fears.

US launched "self-defense" strikes following an incident where an American helicopter was shot down, triggering Iranian retaliatory attacks on US military facilities in Bahrain, Jordan, and Kuwait.

In response to what it termed "unwarranted and continued aggression," US Central Command (CENTCOM) confirmed that the US began airstrikes in Iran on Wednesday. Furthermore, President Donald Trump warned of severe military action if an interim peace deal is not finalized, accusing Tehran of stalling. Iranian officials, however, maintain they will not back down.

Compounding market jitters, May US inflation accelerated at its fastest pace in over three years due to surging energy costs, though the data matched expectations. While traders modestly pared back Federal Reserve rate hike projections, a December quarter-point increase remains fully priced in. Market focus now turns to the upcoming release of May's Producer Price Index (PPI) and Initial Jobless Claims.

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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