Silver Price Forecast: XAG/USD rises to near $78.00 on safe-haven demand

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Silver price (XAG/USD) extends its gains for the second successive session, trading around $78.00 per troy ounce during the Asian hours on Thursday. The precious metal Silver receives support from rising safe-haven demand amid persistent tensions between the United States (US) and Iran.

Silver gains as safe-haven demand rises amid ongoing US-Iran tensions.
US-Iran talks remain unresolved, with Tehran claiming a general framework agreement on a possible nuclear deal.
Dollar-denominated Silver may be capped as the firm US Dollar follows hawkish Fed signals.

US-Iran talks remain unresolved, with Tehran citing a “general agreement” on the framework of a potential nuclear deal with US officials. Vice President JD Vance said Iran failed to meet US red lines, while President Donald Trump reiterated that military action remains an option. Reports indicate any US strike could turn into a prolonged campaign, with Israel advocating regime change in the Islamic Republic.

Meanwhile, Ukraine and Russia ended two days of peace talks in Geneva without progress. President Volodymyr Zelenskiy accused Moscow of stalling US-led efforts to end the four-year conflict. Trump has repeatedly pressed Ukraine to accept a deal that may involve significant concessions, as Russian forces continue striking energy infrastructure and advancing on the battlefield.

However, gains in dollar-denominated Silver may be capped as the US Dollar (USD) stays firm amid hawkish signals from the Federal Reserve (Fed). A stronger Greenback often reflects higher US yields, increasing the opportunity cost of holding non-yielding assets like Silver. The grey metal also becomes more expensive for holders of other currencies, reducing global demand.

Federal Open Market Committee (FOMC) Minutes from the January meeting revived speculation about potential rate hikes if inflation remains elevated. While most policymakers supported keeping rates unchanged, only a few favored a cut, and officials indicated they could ease policy if inflation moderates as expected. Traders modestly pared Fed rate cut bets but still expect two 25 basis points reductions before year-end.

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.

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