Silver price (XAG/USD) fell nearly 1% after registering gains in the previous session, trading around $48.30 during the Asian hours on Friday. The downside of the precious metals, including Silver, could be attributed to the optimism surrounding the potential for a United States (US)-China trade deal.
Additionally, Silver prices fall as profit-taking hit the market amid concerns that the metal may have moved into overvalued territory. Traders await September’s US inflation data due later in the day, amidst the ongoing United States (US) government shutdown, resulting ina data blackout.
US President Donald Trump said on Wednesday that he expects to strike several agreements with Chinese President Xi Jinping during their meeting in South Korea next week. The White House confirmed that President Donald Trump will meet Chinese leader Xi Jinping on October 30 in South Korea on the sidelines of the Asia‑Pacific Economic Cooperation (APEC) Summit, per Reuters.
The grey metal’s recent rally was fueled by robust safe-haven demand and optimism about Silver’s long-term industrial use in electric vehicles, data centers, and solar energy. Additionally, the tightening inventories in London and Shanghai vaults contributed to the upside of the precious metal.
However, the safe-haven Silver may again attract buyers amid the ongoing US government shutdown. The government impasse has entered its 24th day, marking the second-longest federal funding lapse in history, with no end in sight. The GOP-backed stopgap bill failed to pass in the Senate for a 12th time on Wednesday evening.
The non-interest-bearing Silver may gain ground due to the increased likelihood of further rate cuts by the Federal Reserve (Fed) in 2025. The CME FedWatch Tool indicates that markets are now pricing in nearly a 98% chance of a Fed rate cut in October and a 92% possibility of another reduction in December.
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.