Silver Price Forecast: XAG/USD remains subdued near $39.00 amid dampened safe-haven demand

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Silver price (XAG/USD) remains subdued for the third consecutive day, trading around $39.00 per troy ounce during the Asian hours on Friday. The price for the Silver faces challenges amid easing trade tensions and rising risk appetite.

Silver price continues its losing streak amid easing trade tensions, dampening demand for safe-haven assets.
The US and EU are reportedly close to finalizing a deal that would impose 15% tariffs on EU goods.
US Initial Jobless Claims fell for the sixth consecutive week, boosting expectations that Fed will keep rates unchanged next week.

Investors continue to monitor progress in tariff negotiations, with the US and EU reportedly nearing an agreement that would impose 15% tariffs on EU goods imported into the US. Additionally, US President Donald Trump announced on Tuesday a major tariff deal with Japan, which includes a 15% tariff on Japanese exports.

US Initial Jobless Claims fell to 217,000 last week, down from 227,000 and 221,000 in the prior weeks. This marks the sixth consecutive weekly decline, the longest streak since 2022, underscoring the resilience of the labor market. The data supports expectations that the Federal Reserve (Fed) will keep interest rates unchanged at next week’s meeting. Markets are now pricing in fewer than two rate cuts for the year, with the first fully expected in October.

Meanwhile, investors also noted renewed tension between US President Donald Trump and Fed Chair Jerome Powell, as they clashed over the central bank's renovation costs. Trump repeated his call for lower rates but said the renovation issues weren’t enough to justify firing Powell.

Moreover, US Treasury Secretary Scott Bessent said on Wednesday that a nominee for the next Federal Reserve Chair is likely to be announced in December or January. Bessent emphasized that there is “no rush” to select a successor to current Fed Chair Jerome Powell.

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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