Silver Price Forecast: XAG/USD trades near fresh high of $70.00 due to safe-haven demand

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Silver price (XAG/USD) hit a fresh record high of $70.00 during the Asian hours on Tuesday, trading around $69.70 per troy ounce at the time of writing. Precious metals, including Silver receive support from safe-haven demand amid rising United States (US)–Venezuela tensions.

Silver gains support from safe-haven demand amid rising US–Venezuela tensions.
US President Trump said the US will keep seizing Venezuelan Oil and ships, and may sell the Oil.
Fed’s Miran said failing to ease policy raises recession risks, adding the need to dissent for a 50 bps cut diminishes as rates fall.

US President Donald Trump said on Monday that the US would keep and maybe sell the Oil it had seized off the coast of Venezuela in recent weeks. Trump added that the US would also keep the seized ships. Moreover, Ukraine continues strikes on Russian energy infrastructure, with the latest attack damaging two vessels and two piers and igniting a fire in a Black Sea coastal village.

The non-interest-bearing Silver attracts investors amid growing expectations that the Federal Reserve will continue easing policy, reinforced by President Donald Trump’s calls for lower borrowing costs.

Federal Reserve (Fed) Member of the Board of Governors Stephen Miran said in an interview on Bloomberg TV on Monday that the last few months have seen data consistent with his view of the world and that he doesn’t see a recession in the near term. Miran said that failing to ease policy would raise recession risks, adding that the need to dissent for a 50 basis points diminishes over time as rates are reduced.

Traders await the US Gross Domestic Product (GDP) Annualized for the third quarter due on Tuesday. The US economy is estimated to have expanded at an annual rate of 3.2% in Q3. It would be a slowdown from the 3.8% growth in Q2.

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.