Silver Price Forecast: XAG/USD gains traction above $32.00 on trade war concerns
13.02.2025, 02:32

Silver Price Forecast: XAG/USD gains traction above $32.00 on trade war concerns

  • Silver price drifts higher to $32.25 in Thursday’s Asian session. 
  • Rising concerns about trade tension and potential retaliatory measures by Trump support the Silver price. 
  • Fed’s Powell emphasized that the central bank is in no rush to cut rates and there has been great progress on inflation.

Silver price (XAG/USD) edges higher to $32.25 during the Asian trading hours on Thursday. Trade war concerns drive the safe-haven demand, supporting the white metal. Traders await the US weekly Initial Jobless Claims and Producer Price Index (PPI), which are due later on Thursday. 

US President Donald Trump on Monday imposed a 25% tariff on all steel and aluminum imports into the United States (US) with no exceptions or exemptions. The White House said late Wednesday that Trump could announce his reciprocal tariff plan on Thursday. 

Trump recently said he planned to slap reciprocal tariffs on “every country” that imposes import duties on the United States. The concerns about the trade war tensions could further support the Silver price. 

Data released on Wednesday showed that the US consumer prices rose more than economists expected in January, raising the possibility that the Federal Reserve (Fed) will hold interest rates higher for longer as it battles to bring down price pressures. Fed Chair Jerome Powell noted the latest inflation data showed that while the US central bank has made substantial progress toward taming inflation, there is still more work to do. The higher for longer Fed rate narrative could lift the Greenback and weigh on the USD-denominated commodity price. 

"The takeaway is no matter what the reason was for the upside surprise, the Fed has been very clear that it won't cut rates until inflation is close to 2%," said Adam Button, chief currency analyst at ForexLive in Toronto.

Silver FAQs

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.

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.

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.

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.


 

 

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