Silver Price Forecast: XAG/USD rises to near $95.00 on safe-haven demand amid Middle East tensions
Silver price (XAG/USD) jumps to near $94.90 during the early Asian trading hours on Monday. The white metal attracts some buyers amid escalating geopolitical tensions in the Middle East following the United States (US) and Israeli strikes on Iranian targets. 
  • Silver price climbs to around $94.90 in Monday’s early Asian session. 
  • Tensions in the Middle East raise market uncertainty and prompt some traders to buy safe-haven assets.
  • Market participants expect the Fed to hold rates steady at the March meeting.

Silver price (XAG/USD) jumps to near $94.90 during the early Asian trading hours on Monday. The white metal attracts some buyers amid escalating geopolitical tensions in the Middle East following the United States (US) and Israeli strikes on Iranian targets. 

US President Donald Trump stated that the US military will keep attacking Iran until his objectives are met, while he acknowledged that "there will likely be more American casualties." Trump on Sunday confirmed the death of Iran’s supreme leader, Ayatollah Ali Khamenei, and said the US and Israel had struck hundreds of targets in Iran, including Revolutionary Guard facilities and air defenses.

Ongoing strikes in the Middle East have diminished hopes for a quick diplomatic resolution, fueling "risk-off" sentiment that favors precious metals. 

However, a hotter-than-expected US Producer Price Index (PPI) could lift the US Dollar (USD) and weigh on the USD-denominated commodity price. This report signaled that inflation could reaccelerate in the upcoming months and could reinforce expectations that the US Federal Reserve (Fed) will maintain higher interest rates for longer.

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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