Silver Price Forecast: XAG/USD turns upside down on progress in Russia-Ukraine peace talks

Silver price corrects from the all-time high of $84.03 amid progress in peace talks on the war in Ukraine.
Elon Musk condemns China’s export restrictions on Silver, starting from January 1, 2026.
The Fed is expected to deliver at least two interest rate cuts next year.

Sagar Dua FXStreet

Silver price (XAG/USD) retraces to near $75.00 in the Asian trading session on Monday from its all-time high of $84.03 posted in opening trading hours. The white metal gives up its intraday gains and turns slightly negative as United States (US) President Donald Trump has signaled progress in peace talks between Russia and Ukraine.

US President Donald Trump and Ukrainian President Volodymyr Zelensky have stated after a meeting in Florida, earlier in the day, that a deal on pace in Ukraine is close to being reached, flagging some key issues remaining unresolved, such as how much territory Ukraine will hand over to Russia, and the future of the Zaporizhzhia nuclear power plant in Ukraine, which is currently under Russian control, BBC reported.

Signs of easing geopolitical tensions often diminish the appeal of safe-haven assets, such as Silver.

Meanwhile, the outlook of the Silver price remains firm amid headlines stating China’s export curbs on the precious metal and firm expectations that the Federal Reserve (Fed) will deliver more interest rate cuts in 2026 than it had projected in the policy meeting announced in the middle of December.

Beijing has announced new restrictions on the export of Silver, starting from 1 January 2026, limiting smaller exporters from selling the white metal overseas, raising global supply concerns. Chinese authorities have stated that exporters of silver must obtain government licences, with eligibility limited to large, state-approved firms meeting strict production and financing thresholds.

In response, Tesla’s leader, Elon Musk, has strongly condemned Beijing’s decision, highlighting Silver’s demand in various industries. “This is not good. Silver is needed in many industrial processes,” Musk posted on Twitter, which is now X.

The CME FedWatch tool shows that the odds of the Fed reducing interest rates at least 50 bps in 2026 are 73.3%. However, the Fed’s dot plot showed that policymakers collectively see the Federal Fund Rate heading to 3.4% by the end of 2026, indicating that there won’t be more than one interest rate cut.

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

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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