Silver Price Forecast: XAG/USD maintains position above $33.50 due to safe-haven demand
- Silver price appreciate amid safe-haven appeal following the US auto tariff announcement.
- The non-yielding Silver could have attracted buyers amid a weaker US Dollar and Treasury yields.
- Traders await Friday’s Personal Consumption Expenditures (PCE) report—the Fed’s preferred inflation gauge.
Silver (XAG/USD) recovers recent losses from the previous session, trading around $33.70 per troy ounce during Asian hours on Thursday. The metal gains traction as investors seek safe-haven assets following the US auto tariff announcement, which has fueled concerns over potential retaliatory measures next week.
Risk-off sentiment intensified after US President Donald Trump signed an order late Wednesday imposing a 25% tariff on auto imports, effective April 2, with collections starting the next day. However, auto parts imports will receive a one-month reprieve.
Additionally, Silver, a non-yielding asset, could have attracted buyers as US Treasury yields decline, with the 2-year and 10-year yields hovering at 4.0% and 4.34%, respectively. Moreover, a weaker US Dollar (USD) also makes Silver more affordable for foreign buyers, further supporting the demand for the grey metal.
Meanwhile, the Federal Reserve (Fed) reaffirmed its December projection for two rate cuts this year but adopted a cautious stance. Minneapolis Fed President Neel Kashkari stressed the ongoing inflation battle, stating, "The job market has stayed strong, but the biggest challenge is to finish the job," echoing Chair Powell’s view that rate cuts are not imminent. Kashkari also highlighted policy uncertainty as a complicating factor for the Fed.
Traders are closely monitoring upcoming US economic data, including weekly Initial Jobless Claims and the final Q4 Gross Domestic Product (GDP) Annualized report due Thursday. Additionally, Friday’s release of the Personal Consumption Expenditures (PCE) report—the Fed’s preferred inflation gauge—will provide further policy insights.
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.