Silver price (XAG/USD) drifts higher to around $32.70 during the Asian trading hours on Monday. The weakening of the US Dollar (USD) provides some support to the USD-denominated commodity price. Furthermore, the uncertainty and concerns over US President Donald Trump's tariff plans might boost the safe-have flows, which contribute to Silver's upside.
Silver prices rose recovering some of the losses from the previous session as the dollar came under pressure due to a deteriorating economic outlook in the US and a stronger euro. Ongoing trade and geopolitical uncertainties continued to fuel safe-haven demand for the precious metal. Last week, US President Donald Trump's threat to impose tariffs on key sectors, including cars, semiconductors, pharmaceuticals, and lumber, keeping markets on edge. On Friday, Trump also confirmed that Russia had indeed invaded Ukraine, while announcing that Kyiv would soon sign a minerals agreement with the US as part of efforts to resolve the conflict. Meanwhile, in Germany, the conservative Christian Democratic Union won the general election, with leader Friedrich Merz expected to form a coalition government focused on fiscal reform.
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 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.
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.
Source: Fxstreet
