Silver Price Forecast: XAG/USD rises to near $78.00 due to potential US-Iran agreement

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Silver price (XAG/USD) rises for the second successive day, trading around $77.90 per troy ounce during the Asian hours on Thursday.

Silver rises as US-Iran deal hopes eased inflation fears and tempered hawkish central bank expectations.
Fed’s Goolsbee warned that inflation has accelerated since the conflict, moving further from the Fed’s 2% target.
The US proposed to Iran a memorandum of understanding to gradually reopen the Strait of Hormuz.

Silver price (XAG/USD) rises for the second successive day, trading around $77.90 per troy ounce during the Asian hours on Thursday. Non-yielding Silver prices found support from optimism surrounding a potential US-Iran agreement, which triggered a sharp drop in oil prices, easing inflation concerns, and reducing expectations for prolonged hawkish central bank policies.

However, Chicago Fed President Austan Goolsbee cautioned that inflation has not continued to moderate toward the Federal Reserve’s 2% target and has instead accelerated since the conflict began.

The BBC reported on Wednesday that Iran said a US proposal to end the conflict is “still being considered,” despite reports suggesting both sides may be nearing an agreement. According to reports, the US submitted a one-page memorandum of understanding to Iran that would gradually reopen the Strait of Hormuz and ease the American blockade on Iranian ports. Discussions regarding Iran’s nuclear program would follow later, though no final agreement has been reached.

Meanwhile, CNBC reported that US President Donald Trump warned Iran would face bombing “at a much higher level” if it refuses to agree to a peace deal. In a Truth Social post, Trump said the US military campaign, dubbed Operation Epic Fury, “will be at an end” if Iran “agrees to give what has been agreed to.”

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.