Silver Price Forecast: XAG/USD rises to near $32.00 amid rising Middle-East tensions

• Silver price gains ground due to safe-haven demand following new Trump’s tariffs.
• Israeli PM Netanyahu warned to end the ceasefire if Hamas does not release hostages by Saturday noon.
• The non-yielding Silver could struggle as Fed’s Powell signaled there is no urgency to cut interest rates.

Silver price (XAG/USD) retraces its recent losses, hovering around $31.90 per troy ounce during Wednesday's Asian session. Safe-haven demand for the precious metal rises amid growing risk aversion following new US tariffs and escalating geopolitical tensions in the Middle East.

On Monday, US President Donald Trump implemented a flat 25% tariff on steel and aluminum imports, eliminating all exemptions and nullifying previous trade agreements with key US allies. The move aims to bolster struggling domestic industries but raises the risk of a broader trade conflict.

Geopolitical tensions in the Middle East could further support the Silver price. Israeli Prime Minister Benjamin Netanyahu warned late Tuesday that the ceasefire would end, and Israel would resume "intense fighting" in Gaza if Hamas does not release hostages by Saturday noon, according to the BBC. Earlier, President Trump urged Israel to break the ceasefire if hostages were not returned by the weekend.

However, demand for non-interest-bearing Silver could face headwinds, as higher US interest rates may persist. In his semi-annual report to Congress, Federal Reserve Chair Jerome Powell stated that officials “do not need to be in a hurry" to cut rates, citing a strong job market and solid economic growth. Powell also noted that President Trump’s tariff policies could exert additional upward pressure on prices, making it more challenging for the Fed to ease monetary policy.

Investors now await the release of the US Consumer Price Index (CPI) inflation data on Wednesday, which could shape expectations for the Fed’s monetary policy. Headline CPI inflation is projected to remain steady at 2.9% year-over-year, while core CPI inflation is expected to ease slightly to 3.1% from the previous 3.2%.

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.