Silver Price Forecast: XAG/USD rebounds above $79 as weaker US Dollar supports demand

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Silver (XAG/USD) rebounds on Friday, trading around $79.40 at the time of writing and gaining 1.25% on the day. The Silver price remains close to the $79 mark as investors monitor geopolitical developments and monetary policy expectations in the United States (US).

Silver advances on Friday, supported by renewed pressure on the US Dollar.
Optimism surrounding potential diplomatic progress between the US and Iran influences market sentiment.
Expectations of a more accommodative stance from the Federal Reserve continue to support precious metals.

The precious metal moves in a relatively cautious environment as markets await further details about a possible second round of negotiations between the US and Iran. Washington has indicated that talks with Tehran could resume before the expiration of the current two-week ceasefire scheduled for April 21. Investors are closely watching these developments, which could influence global risk sentiment and safe-haven flows.

US President Donald Trump recently expressed optimism that a diplomatic agreement with Iran could be close, stating that Tehran appears more willing to make concessions than in previous discussions. Reports suggest that negotiations could involve commitments related to Iran’s nuclear program and enriched uranium stockpiles.

Expectations of progress in diplomacy are contributing to persistent pressure on the US Dollar (USD). The US Dollar Index (DXY), which tracks the value of the Greenback against a basket of major currencies, is on track for a new weekly decline. A softer US currency tends to support commodities priced in USD, including Silver.

At the same time, easing tensions in the Middle East are weighing on Oil prices and moderating inflation expectations. This dynamic has encouraged traders to reinforce bets that the Federal Reserve (Fed) could adopt a more accommodative monetary policy stance in the coming months.

Lower interest rate expectations are generally supportive for non-yielding assets such as Silver. With yields potentially declining, the opportunity cost of holding precious metals decreases, which helps maintain investor demand for assets like XAG/USD in the current macroeconomic environment.

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.