Silver Price Forecast: XAG/USD holds losses below $48.00 due to risk-on mood

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Silver price declines as market sentiment improves on easing US-China trade tensions.
US-China negotiators reached a consensus ahead of the Trump-Xi Jinping meeting.
The non-yielding Silver may attract investors as the Fed is anticipated to deliver a 25-basis-point rate cut this week.

Silver price (XAG/USD) extends its gains for the second successive session, trading around $48.00 per troy ounce during the European hours on Monday. The price of the grey metal declines due to weakened safe-haven demand, driven by the progress in the United States (US)-China trade negotiations. Silver prices also decline as profit-taking emerges amid concerns of overvaluation following the metal’s surge to record highs.

The risk-on sentiment improves after reports that top negotiators from the US and China have reached a consensus on major disputes and paved the way for Presidents Donald Trump and Xi Jinping to meet on Thursday to finalize a trade deal. Officials in Malaysia announced after two days of talks that both sides had agreed on key issues, including export controls, fentanyl, and shipping levies.

Moreover, US Treasury Secretary Scott Bessent told CBS News that President Trump’s threat to impose 100% tariffs on Chinese goods “is effectively off the table.” Bessent added that China has agreed to make “substantial” soybean purchases and to postpone its rare-earth export controls “for a year while they re-examine it.”

The downside of the non-interest-bearing Silver could be restrained as softer recent US inflation data for September support the likelihood of a rate cut by the US Federal Reserve (Fed) this week. The CME FedWatch Tool indicates that markets are now pricing in nearly a 97% chance of a Fed rate cut in October and a 96% possibility of another reduction in December. It is worth noting that returns on interest-bearing assets decline when interest rates fall. This makes non-yielding assets such as Silver more appealing, since investors aren’t missing out on as much interest income by holding them.

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.