Silver Price Forecast: XAG/USD trades near 109.00 after revering recent losses

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Silver price (XAG/USD) continues its four-day winning streak after recovering daily losses, trading around $108.90 during the Asian hours on Tuesday. The safe-haven Silver rebounded amid rising political and trade risks.

Silver rises on safe-haven demand as US shutdown risks grow after Schumer opposes funding package.
The precious metal rises as traders turn cautious amid Federal Reserve uncertainty.
Trump warned that tariffs on South Korean goods could rise to 25% from 15% over deal approval delays.

The US government is heading toward a potential partial shutdown after Senate Democratic leader Chuck Schumer vowed to oppose a funding package that includes appropriations for the Department of Homeland Security, leaving Congress facing a January 30 deadline to avert a shutdown.

Precious metals, including Silver, move higher as traders turn cautious amid uncertainty surrounding the Federal Reserve (Fed). US President Donald Trump said last week he would soon announce his nominee to replace Fed Chair Jerome Powell, fueling speculation that the next chair may favor faster interest rate cuts. Focus is shifted toward the Federal Reserve’s (Fed) policy decision on Wednesday.

President Trump warned he could lift tariffs on South Korean goods to 25% from 15%, blaming delays in Seoul’s legislature approving a trade deal. Trump also said the US would impose 100% tariffs on Canadian goods if Ottawa were to strike a trade agreement with China, the BBC reported over the weekend. In response, Canadian Prime Minister Mark Carney said on Sunday that Canada has no plans to pursue a free trade deal with Beijing.

Silver metal also gained from a broader pullback in sovereign bonds and currencies, the so-called debasement trade, as investors rotate into real assets amid rising concerns over heavy fiscal spending in major economies.

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.