Silver Price Forecast: XAG/USD rebounds near $52.00 due to risk-off mood, dovish Fed tone

POPULAR ARTICLES

Silver price (XAG/USD) edges higher after registering more than 4.25% losses in the previous session, trading around $52.00 per troy ounce during the European hours on Monday. The price of the precious Silver plunged as investors booked profits after reaching a record high of $54.86 on October 16.

Silver price rebounds after registering more than 4.25% losses in the previous session.
Silver may attract renewed buying interest amid heightened risk aversion stemming from the ongoing US government shutdown.
The upside of the safe-haven Silver could be limited due to easing US-China trade tensions.

However, the non-interest-bearing Silver may regain its ground amid an increased likelihood of further rate cuts by the US Federal Reserve (Fed). The CME FedWatch Tool indicates that markets are now pricing in nearly a 99% chance of a Fed rate cut in October and a 96% possibility of another reduction in December.

Additionally, Silver attracts buyers due to increased risk aversion, driven by the ongoing US government shutdown, which has stretched into its 19th day with no resolution in sight, as senators failed for the tenth time to break the impasse during Thursday’s votes. It now stands as the third-longest funding lapse in modern US history.

The safe-haven demand for Silver could further weaken amid easing trade tensions between the United States (US) and China. US President Donald Trump said over the weekend that he wants China to buy soybeans at least in the amount they were buying before. Trump added that he believes China will make a deal on soybeans. “We can lower what China has to pay in tariffs, but China has to do things for us too,” he added.

US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are scheduled to meet in the coming days to ease tensions ahead of a potential meeting between Presidents Trump and Xi later this month.

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.