Silver Price Forecast: XAG/USD holds gains above $75.50 amid Iran deal uncertainty

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Silver price (XAG/USD) holds gains after experiencing volatility, trading around $75.60 per troy ounce during the Asian hours on Monday.

Silver traded sideways as traders closely monitored fluid developments surrounding US-Iran peace negotiations.
Trump seeks altering proposal terms regarding the Strait of Hormuz and removing Iran's highly enriched uranium.
Israel ordered troops to advance into Lebanon intensified Middle East supply concerns.

Silver price (XAG/USD) holds gains after experiencing volatility, trading around $75.60 per troy ounce during the Asian hours on Monday. The non-yielding white metal traded sideways as market participants closely assessed the highly fluid developments surrounding United States (US)-Iran peace negotiations.

According to a BBC report, US President Donald Trump is seeking to alter and reinforce several key terms of a proposal aimed at ending the conflict. These requested changes specifically target regulations surrounding the strategic Strait of Hormuz and the mandatory removal of highly enriched uranium from Iran.

Iranian officials are projecting a mix of caution and firm resolve. Iranian Foreign Minister Abbas Araghchi confirmed that dialogue and message exchanges with Washington remain ongoing, though he dismissed current media commentary as mere speculation, emphasizing that the negotiations cannot be properly evaluated until a definitive outcome is reached. Meanwhile, Parliament Speaker and top negotiator Mohammad Bagher Ghalibaf established a strict boundary for the talks, asserting that Tehran will reject any agreement unless it explicitly ensures the rights of the Iranian people are secured.

This geopolitical uncertainty continues to weigh on the precious metal. Israel has ordered its troops to advance further into Lebanon, marking a tactical escalation in its conflict with the Iran-backed militant group Hezbollah. The military push comes despite a ceasefire agreement announced more than six weeks ago, severely threatening to unravel earlier diplomatic progress.

Silver has faced headwinds since late February, as the Middle East conflict drove energy prices sharply higher, fueling concerns about inflationary pressures and the prospect of higher-for-longer interest rates. With geopolitics hanging in the balance, investors are now awaiting the latest US monthly jobs report due later this week, which could offer fresh insight into labor market strength and the future path of Federal Reserve (Fed) policy.

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.