Silver price forecast: XAG/USD breaks below $38.00 as safe-haven demand weakens
- Silver price struggles amid improved sentiment following White House meeting.
- Trump and Zelenskyy expressed hope that the meeting would pave the way for trilateral talks with Russian President Putin.
- The non-interest-bearing Silver could attract buyers as recent US data keep intact the dovish tone surrounding the Fed policy outlook.
Silver price (XAG/USD) remains subdued for the fourth successive session, trading around $38.00 per troy ounce during the Asian hours on Tuesday. Silver prices face challenges amid dampened safe-haven demand, driven by positive signals toward a possible resolution of the Ukraine-Russia war.
US President Donald Trump and Ukrainian President Volodymyr Zelenskyy both hoped that Monday’s gathering would eventually lead to three-way talks with Russian President Vladimir Putin. The meeting was also attended by key European leaders, including French President Emmanuel Macron, German Chancellor Friedrich Merz, European Commission President Ursula von der Leyen, and UK Prime Minister Keir Starmer.
Trump wrote on social media that he had spoken with the Russian leader and begun arranging a meeting between Putin and Zelenskyy, to be followed by a trilateral summit with all three presidents. According to Reuters, citing a European delegation source, Trump told European leaders that Putin had suggested this sequence. While the Kremlin has not publicly confirmed its agreement, a senior Trump administration official said the Putin-Zelenskyy meeting could be held in Hungary.
However, the price of the grey metal could gain ground as recent US economic data keeps intact the dovish tone surrounding the US Federal Reserve’s (Fed) policy outlook. CME’s FedWatch tool suggests that markets are pricing in 84% odds of a 25 basis point Fed rate cut in September. Traders will likely observe the Jackson Hole Economic Policy Symposium due later in the week. Fed Chair Jerome Powell’s speech will also be eyed for guidance on the Fed’s September policy outlook.
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.