Silver Price Forecast: XAG/USD holds losses below $33.00 due to improved risk appetite
- Silver price struggles as risk-on sentiment rises after Trump announced potential progress in trade negotiations with China.
- The safe-haven Silver may regain its ground amid market concerns escalate as tensions grew between Trump and Zelensky.
- The non-interest-bearing Silver could have faced challenges due to cautious Fedspeak.
Silver price (XAG/USD) remains under pressure after gaining in the previous session, trading around $32.90 per troy ounce during Asian trading hours on Friday. Safe-haven metals like Silver face selling pressure as risk-on sentiment strengthens following US President Donald Trump’s announcement of potential progress in trade negotiations with China. Trump’s remarks helped ease market concerns over tariffs, and he expressed expectations that Chinese President Xi Jinping might visit, while also discussing matters related to TikTok.
However, Silver found some support amid lingering trade and geopolitical uncertainties after Trump announced plans to impose 25% tariffs on imports of automobiles, semiconductors, and pharmaceuticals, reigniting fears of a broader global trade war.
Market concerns also escalated as tensions grew between Trump and Ukraine’s President Volodymyr Zelensky. Trump called Zelensky a "dictator" following the Ukrainian leader’s criticism of US-Russia talks in Saudi Arabia, from which Kyiv was excluded. Zelensky responded by stating that Trump was "living in a disinformation space" controlled by Moscow, according to the BBC.
Meanwhile, US Federal Reserve officials signaled in January that they want to see further progress on inflation before cutting interest rates. Federal Reserve Board Governor Adriana Kugler stated on Thursday that inflation still has "some way to go" before reaching the Fed’s 2% target, while St. Louis Fed President Alberto Musalem warned of potential stagflation risks and rising inflation expectations, per Reuters.
Silver FAQs
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.
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.
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.
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.