Silver Price Forecast: XAG/USD remains close to $34.00 near five-month highs
17.03.2025, 08:45

Silver Price Forecast: XAG/USD remains close to $34.00 near five-month highs

  • Silver price maintains its position near the five-month high at $34.08, supported by strong safe-haven demand.
  • Houthis take responsibility for attacking the USS Harry S. Truman aircraft carrier.
  • Risk sentiment could improve as Trump and Putin are expected to hold talks regarding a potential ceasefire in Ukraine.

Silver price (XAG/USD) continues to lose ground for the second successive day, trading around $33.70 per troy ounce during the European hours on Monday. However, Silver price maintains its position near the five-month high at $34.08, reached on March 14.

Silver receives support from safe-haven flows amid escalating geopolitical tensions in the Middle East. On Sunday, the Houthis claimed responsibility for an attack involving 18 ballistic and cruise missiles, as well as drones, targeting the USS Harry S. Truman aircraft carrier and its escorting warships in the northern Red Sea.

Meanwhile, US Defense Secretary Lloyd Austin reaffirmed that the United States (US) would continue targeting Yemen’s Houthis until they cease their attacks on shipping. The Iran-backed group, in turn, has vowed to escalate its retaliation in response to recent US strikes.

However, the upside of precious metals like Silver could be limited due to potential discussions on a ceasefire in Ukraine that may take place this week, as US President Donald Trump and Russian President Vladimir Putin are expected to engage in talks.

Steve Witkoff, Trump’s envoy, stated on Sunday that he anticipates the two leaders will speak, adding that Putin “accepts the philosophy” of Trump’s ceasefire proposal, according to The Guardian. Last week, the US and Ukraine proposed a 30-day ceasefire to Russia, with Putin reportedly showing support for the initiative.

Additionally, concerns over an escalating trade war, fueled by exchanges of tariffs between the U.S. and its major trading partners, further strengthened Silver's safe-haven appeal. Meanwhile, investors look forward to a series of central bank policy meetings later this week, including the US Federal Reserve’s decision. The Fed is widely expected to keep rates on hold amid uncertainty over President Donald Trump's economic policies.

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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