Silver Price Forecast: XAG/USD remains solid near $34.00 amid increased safe-haven demand

• Silver maintains its position near the five-month high at $33.96, reached on Thursday.
• Safe-haven demand strengthened after President Trump threatened a 200% tariff on all European wines and champagne.
• A non-interest-bearing Silver finds support from growing expectations of Fed rate cuts following weaker US inflation data.

Silver price (XAG/USD) continues its upward momentum for the fourth consecutive day, trading around $33.90 per troy ounce during European trading hours on Friday. The precious metal benefits from increased safe-haven demand as global trade tensions increase.

Market concerns intensified after US President Donald Trump threatened 200% tariffs on European wines, champagnes, and other alcoholic beverages in response to the EU’s 50% tariff on American whiskey.

Silver, a non-interest-bearing asset, finds support from growing expectations of Federal Reserve (Fed) rate cuts following weaker US inflation data. On Thursday, the US Producer Price Index (PPI) rose 3.2% year-over-year in February, down from 3.7% in January and below the 3.3% forecast. The core PPI, which excludes food and energy, increased 3.4% annually, compared to 3.8% in January.

Meanwhile, Wednesday’s Consumer Price Index (CPI) data showed a decline to 2.8% year-over-year from 3.0%, while core inflation fell to 3.1% from 3.3%.

In political developments, Senate Democratic Leader Chuck Schumer announced late Thursday his support for keeping the government open, as the Senate prepares to vote on a GOP stopgap funding bill on Friday.

Additionally, US Commerce Secretary Howard Lutnick stated that the administration plans to balance the budget within President Donald Trump's term, aiming to achieve this over three years.

However, Silver's upside could be limited as the US Dollar (USD) continues to strengthen. A stronger USD makes Silver more expensive for foreign buyers, potentially dampening demand. At the time of writing, the US Dollar Index (DXY), which tracks the USD against six major currencies, is hovering near 104.00.

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.