Silver Price Forecast: XAG/USD extends the rally to above $38.00 amid renewed trade concerns

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Silver price attracts some buyers to near $38.05 in Thursday’s early European session.
Tariff uncertainty and renewed trade concerns support the Silver price, a safe-haven asset.
Investors await the US weekly Initial Jobless Claims data and Fedspeak later on Thursday.

The Silver price (XAG/USD) extends its upside around $38.05 during the early European trading hours on Thursday. The white metal trades in positive territory for the fifth consecutive day amid a softer US Dollar (USD). Investors will take more cues from the speeches of Federal Reserve (Fed) officials later on Thursday, including Raphael Bostic and Alberto Musalem.

US President Donald Trump said on Wednesday that he could impose further tariffs on China similar to the 25% levies announced earlier on India over its purchases of Russian oil, depending on what happens. Additionally, Trump noted that he could announce an additional 15% tariff on all Japanese imports. Tariff uncertainty and renewed trade tensions boost safe-haven assets like the Silver price.

Traders have been pricing in the chance of more interest rate cuts than previously expected by the Fed this year. The bets were lifted by the weaker-than-expected US Nonfarm Payrolls (NFP) report released last Friday. Lower interest rates could reduce the opportunity cost of holding Silver, supporting the non-yielding white metal.

The US weekly Initial Jobless Claims will be in the spotlight later on Thursday. The figure is expected to rise to 221,000 for the week ended August 2. In case of a stronger-than-expected outcome, this could support the Greenback and weigh on the USD-denominated commodity price.

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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