Silver Price Forecast: XAG/USD trades near $49.00, one-year lows amid US political shift

Silver drops as US midterm election results signal Democratic control of the House.
Political shifts introduce fresh market uncertainty over the future direction of US fiscal policy.
Softer oil prices offer minor support to non-yielding Silver, though markets still price in a December Fed rate hike.

Akhtar Faruqui FXStreet

Silver price (XAG/USD) extends its losses for the second successive day, trading around $49.20 per troy ounce during Asian hours on Wednesday. Silver prices are trading near a one-year low of $48.62, recorded on November 3, as the Democrats won a majority in the US House of Representatives, taking control from Republicans. This shift raises the possibility of changes in congressional leadership and introduces fresh uncertainty over the future direction of US fiscal policy.

Americans voted in midterm elections on Tuesday to determine control of Congress for the final two years of US President Donald Trump’s term. According to live data from Decision Desk HQ, results have been called in 253 of the 435 House seats, with Democrats securing 152 seats and Republicans winning 101, toward the 218 needed for a majority.

Meanwhile, softer oil prices have provided some support to non-yielding Silver by easing inflation concerns, even as conflicting signals on US-Iran negotiations keep crude near a four-week low. Tehran and Washington are currently reviewing proposals from mediators following reported US airstrikes on Iran’s Qeshm Island. While lower energy prices could reduce expectations for prolonged monetary tightening, markets are still pricing in a 78% probability of a Federal Reserve rate hike in December, according to the CME FedWatch Tool.

Chart Analysis XAG/USD — XAG/USD: Daily Chart

Silver lags gold as ratio widens to 80

According to Commerzbank, silver’s recent weakness is starkly visible in relative terms, with the metal “significantly underperforming gold, as reflected in the rise in the gold/silver ratio to 80.” This widening ratio underscores how sharply silver has fallen compared with gold, reinforcing the sense that the latest leg lower in the white metal has been notably more pronounced than the move in the yellow metal.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

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.

AUD/USD flatlines near 0.6965 as less hawkish RBA counters USD weakness

AUD/USD holds steady above a two-week low, trading near 0.6965 in the Asian session on Wednesday as early midterm election results heighten political uncertainty and weigh heavily on the US Dollar. Moreover, reviving safe-haven demand triggers a fresh leg down in US bond yields, offsetting Fed hike bets and exerting additional pressure on the buck. However, a less hawkish RBA caps the Aussie.

USD/JPY declines below 158.00 as USD weakens on midterm election results

USD/JPY comes under heavy selling pressure on Wednesday, dropping below 158.00 during the Asian session as the US Dollar slumps to a one-month low amid heightened political uncertainty after early US midterm vote counts. Moreover, the prospect of gridlock in Washington drives safe-haven flows, triggering a fresh leg down in US bond yields and further weighing on the buck.

Gold ticks lower while early trend points to Democrats victory in House

Gold trades with caution at around $3,930 in the Asian trading session on Wednesday. The precious metal struggles to gain direction as investors shift their focus to United States Midterm elections where early trend shows that Democrats would have a clear majority in House of Representatives.

Bitcoin tests critical support, Ethereum struggles below resistance, XRP extends losses

Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) remain under pressure on Wednesday as bearish momentum continues to weigh on prices. BTC approaches key support around $76,466, and a decisive close below could open the door to deeper losses. Meanwhile, ETH struggles below key resistance while XRP faces rejection at the upper trendline of a falling channel pattern, all hinting at deeper losses.

US Dollar falls below 101.50 as early midterm results point to Democratic gains

US Dollar Index faces some selling pressure near 101.30 during the early Asian session on Wednesday. Traders will closely monitor the US midterm election outcomes later in the day for fresh impetus. Yields fell across the curve, with the 2-year treasury yields dropped five basis points to 4.566%. Benchmark 10-year yields were down six bps to 4.90%.

The 2% inflation target came from a throwaway remark. It now moves trillions

The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.