Silver Price Forecast: XAG/USD tumbles to near $93.50 on profit-taking after record high

Silver price slumps to near $93.60 in Tuesday’s early Asian session.
Traders booked a profit after Silver reached a record high in the previous session.
Trump tariff threats spark safe-haven demand.

Lallalit Srijandorn FXStreet

Silver price (XAG/USD) attracts some sellers to around $93.60 during the Asian trading hours on Tuesday. The white metal edges lower amid some profit taking after reaching a fresh record high in the previous session. The safe-haven demand might help limit Silver’s losses in the near term.

US President Donald Trump on Saturday stated that he would slap an additional 10% import tariff from February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and the United Kingdom (UK) until the United States (US) is allowed to buy Greenland.

French President Emmanuel Macron reportedly asked the European Union (EU) to activate its “trade bazooka.” This measure could block some of America’s access to EU markets or impose export controls, among a broader list of potential countermeasures. The threat by Trump to impose fresh tariffs on eight European countries opposed to his proposed takeover of Greenland could boost traditional safe-haven assets, benefiting the Silver price.

On the other hand, the US Federal Reserve (Fed) is expected to hold the interest rate steady at its January policy meeting. Markets have priced in nearly a 5% chance of a Fed rate cut later this month, according to the CME FedWatch tool. The view that the US central bank can keep interest rates higher for longer generally lifts the US Dollar (USD) and weighs on the non-interest-bearing assets like Silver.

WTI Oil FAQs

What is WTI Oil?

WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.

What factors drive the price of WTI Oil?

Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.

How does inventory data impact the price of WTI Oil

The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.

How does OPEC influence the price of WTI Oil?

OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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