Silver Price Forecast: XAG/USD rebounds to near $66.00 amid fading US-Iran talks optimism
Silver price (XAG/USD) halts its three-day losing streak, trading around $65.90 per troy ounce during the Asian hours on Monday.
  • Silver may face challenges as inflation and interest rate fears are revived by mounting oil supply concerns.
  • President Trump threatened strikes on Iran if Hezbollah continues attacking Israel, clouding hopes for a US-Iran peace deal.
  • Hawkish Fed policy expectations could continue to weigh heavily on non-yielding Silver.

Silver price (XAG/USD) halts its three-day losing streak, trading around $65.90 per troy ounce during the Asian hours on Monday. However, Silver price could further decline amid renewed concerns over a US-Iran peace deal, a development that keeps both inflation risks and the prospect of prolonged high interest rates at the forefront of investor worries.

According to a CNBC report on Sunday, US President Donald Trump threatened direct strikes on Iran if Hezbollah continues its attacks on Israel. This warning has severely clouded the outlook for diplomatic progress between Washington and Tehran.

Furthermore, President Trump threatened to completely dismantle the current peace framework, even as Vice President JD Vance met with Iranian officials for the first round of talks under an interim deal.

Adding to the friction, Tehran simultaneously announced it had once again closed the strategic Strait of Hormuz. While Iranian state media reported that Tehran had completely suspended negotiations in response to Trump's remarks, sources close to the matter indicated that discussions are quietly ongoing.

The non-yielding Silver could face heavy pressure from expectations of tighter monetary policy. The Federal Reserve (Fed) kept interest rates steady last week but adopted a decidedly hawkish tone. Notably, 9 out of 19 Fed policymakers now project at least one interest rate hike this year, with market investors pricing in a potential increase as early as September.

"The resurgent US dollar, powered by the Fed's newly hawkish tone under Kevin Warsh, has stolen the spotlight," noted Tim Waterer, chief market analyst at KCM Trade, highlighting the growing headwinds facing precious metals.

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.

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