Silver Price Forecast: XAG/USD attracts some buyers to above $37.00 on softer US Dollar

POPULAR ARTICLES

The Silver price (XAG/USD) trades in positive territory around $37.20 during the Asian trading hours on Thursday, bolstered by a weaker US Dollar (USD). Investors brace for further development surrounding US President Donald Trump’s tariff policy on major trade partners.

Silver price gains traction to near $37.20 in Thursday’s Asian session.
Combined safe-haven flows and industrial demand support the Silver price.
US GDP grew at an annual rate of 3.0% in Q2, stronger than expected.

Trump late Wednesday announced a new trade deal with South Korea, stating that the United States (US) would charge a 15% tariff on imports from South Korea. The agreement includes a $350 billion commitment from South Korea toward US-owned and controlled investments. Also, Investors continue to assess the 25% duties on imports from India, along with an unspecified “penalty.” Any signs of tariff uncertainty or renewed trade tensions could boost demand for safe-haven assets such as Silver.

The uptick of the white metal is also supported by rising industrial demand for solar energy, electronics, and green technology, with the metal principally utilized in photovoltaic (PV) solar cells as a vital material for the electrical connections that enable electricity to flow from the solar panel.

On the other hand, the stronger-than-expected US economic data could lift the Greenback and weigh on the USD-denominated commodity price. The US Gross Domestic Product (GDP) expanded at an annual rate of 3.0% for the April through June period, the US Bureau of Economic Analysis showed on Wednesday. This figure followed the 0.5% contraction in the first quarter and came in stronger than the expectation of 2.4%.

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.