Silver Price Forecast: XAG/USD remains below $59.00 on renewed Hormuz tensions

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Silver drops as renewed US-Iran tensions over the Hormuz lift concerns over oil prices and inflation.
Silver's decline is capped as the US and Iran pause attacks ahead of this week's peace talks in Doha.
Non-yielding metal faces headwinds as persistent hawkish Fed expectations keep pressure on the precious metal.

XAG/USD depreciates after two days of gains, trading around $58.80 per troy ounce during the Asian hours on Monday. The price of the white metal falls as fresh military clashes between the United States (US) and Iran in the Strait of Hormuz drove oil higher, sparking renewed fears of inflation. Investors remain highly sensitive to evolving headlines out of the Middle East as they assess the stability of the region and its broader impact on global risk sentiment.

However, Washington and Tehran have agreed to halt attacks against each other before peace talks resume in Doha this week. This diplomatic opening follows several days of retaliatory strikes triggered on Thursday when an Iranian projectile hit a cargo vessel, leading both the US and Iran to accuse one another of violating a previously established June 17 interim ceasefire. Official delegations from both countries are scheduled to meet in Qatar on Tuesday to negotiate an end to the conflict.

The non-yielding Silver also faces challenges due to lingering hawkish expectations from the Federal Reserve (Fed). According to the CME FedWatch Tool, traders are currently pricing in a 59.7% probability of a rate hike as soon as September 2026.

Traders are awaiting this week's key labor market reports, culminating in Thursday’s Nonfarm Payrolls (NFP) data, which are expected to provide critical clues regarding the Fed's interest rate trajectory. Forecasters anticipate June job growth to come in at 114,000, with the Unemployment Rate expected to remain flat at 4.3%.

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.