Silver Price Forecast: XAG/USD retreats from record high to near $53.00 on some profit-taking

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Silver price ( XAG/USD) trades in the negative territory around $53.10 during the Asian trading hours on Thursday. The white metal retreats from the all-time high of $54.86 amid some profit-taking.

Silver price edges lower to around $53.10 in Thursday’s Asian session.
Market expectations for further interest rate cuts by the Fed are increasing after Fed’s Powell speech.
The US government shutdown and US-China trade tensions boost the safe-haven flows.

Silver price ( XAG/USD) trades in the negative territory around $53.10 during the Asian trading hours on Thursday. The white metal retreats from the all-time high of $54.86 amid some profit-taking. However, expectations of US rate cuts and geopolitical and economic uncertainties could provide some support to the white metal.

Silver edges higher after dovish comments from Federal Reserve (Fed) Chair Jerome Powell bolstered bets on a series of rate cuts in the coming months. Traders are currently pricing in nearly a 98% chance of a 25 basis points (bps) Fed rate cut in October, followed by another reduction in December, which is fully priced in, according to Reuters. Lower interest rates could reduce the opportunity cost of holding Silver, supporting the non-yielding precious metal.

Furthermore, ongoing concerns about the US government shutdown and renewed trade tension between Washington and Beijing could boost the safe-haven flows, benefiting the Silver price. US President Donald Trump said Washington was considering cutting some trade ties with China after both countries began imposing additional port fees on ships carrying cargo. This measure will likely raise trading costs and disrupt freight flows.

Trump still plans to meet with Chinese President Xi Jinping later this month. Any signs of easing trade tensions between the world’s two largest economies could undermine the Silver price. Temporary sell-off or profit-taking cannot be ruled out in the near term as the Silver price has risen over 80% year-to-date (YTD).

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.