Silver Price Forecast: XAG/USD hovers around $76.00 as interest rate concerns ease

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Silver price (XAG/USD) gains ground for the second successive day, trading around $75.80 per troy ounce during the Asian hours on Friday.

Silver advances as a tentative US-Iran ceasefire extension eased global inflation and interest rate concerns.
President Trump hasn't yet approved the Iran terms, and Vice President Vance warned that a final agreement remains uncertain.
LMAX’s Joel Kruger noted softer core inflation and moderating growth suggest a less aggressive Fed, supporting risk assets.

Silver price (XAG/USD) gains ground for the second successive day, trading around $75.80 per troy ounce during the Asian hours on Friday. The non-yielding white metal advances following the report that the United States (US) and Iran have tentatively agreed to a 60-day ceasefire extension, easing concerns over inflation and interest rates. This potential breakthrough could allow unrestricted shipping through the crucial Strait of Hormuz, with Iran reportedly committing to clear all maritime mines from the waterway within 30 days.

However, traders still adopt caution after CNN reported on Thursday that US President Donald Trump has not yet approved the terms. Meanwhile, the Guardian reported that US Vice President JD Vance stated Washington was “not there yet” regarding a final agreement with Iran, though he noted that the parties were close to a deal. Furthermore, Vance added that the United States is currently positioned to substantially set back Tehran’s nuclear program if necessary.

Thursday’s US Personal Consumption Expenditures (PCE) report revealed softer-than-expected inflation, with headline and core metrics rising 0.4% and 0.2% month-over-month, respectively. While annual figures remained elevated above the Federal Reserve's target at 3.8% and 3.3%, the cooler data alleviated fears that recent energy shocks would worsen the long-term outlook. Joel Kruger, market strategist at LMAX Group, noted that this combination of softer core inflation and moderating growth suggests the Fed may ease its aggressive "higher-for-longer" interest rate stance, a shift that is generally supportive of risk assets.

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.