Silver Price Forecast: XAG/USD drifts higher amid rising demand, US critical minerals listing

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Silver price (XAG/USD) climbs to near $63.75 and is poised to retest its all-time high during the Asian trading hours on Friday. The white metal extends the rally on rising industrial demand, a weaker US Dollar (USD), and the metal's entry into the US critical minerals list.

Silver price edges higher to around $63.75 in Friday’s Asian session.
Rising demand from green technologies and industrial use lifts the Silver price.
The US added silver to the critical minerals list.

The upside for Silver is bolstered by rising industrial demand from vital technology sectors. Saxo Bank analysts noted that sectors such as solar energy (PV), automotive electric vehicles (EVs) and their infrastructure, and data centers and artificial intelligence (AI) will drive industrial demand higher through 2030.

The US Department of the Interior has added silver to its list of “critical minerals,” increasing the likelihood that the white metal could be included in future tariff policies. Large volumes of silver were delivered into US warehouses ahead of a potential tariff announcement next year, causing a dislocation between the US and the rest of the globe and tightening availability elsewhere. This, in turn, boosts long-term demand expectations, lifting the Silver price.

The US Federal Reserve (Fed) cut its benchmark interest rate by 25 basis points (bps) to a target range of 3.50% to 3.75% at its December policy meeting on Wednesday. Markets are currently pricing in nearly a 78% odds that the Fed will hold interest rates steady next month, compared with a 70% chance just before the rate cut announcement, according to the CME FedWatch tool. Fed rate reductions weigh on the USD and underpin the Silver price, as it makes silver more attractive to non-US investors.

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.