Silver Price Forecast: XAG/USD rises to near $69.00 ahead of US PCE inflation data
- Treasury buybacks weakened the dollar, while falling oil prices eased inflation concerns, boosting Silver’s precious metal appeal.
- Solid consumption from solar panels, electric vehicles, and AI data centers provides strong structural support for Silver.
- Traders await US PCE inflation data and Kevin Warsh’s Jackson Hole speech for signals on September rate cuts.
Silver price (XAG/USD) extends its gains for the second successive day, trading around $68.80 per troy ounce during the European hours on Wednesday. Silver prices advance as market participants evaluate the US Treasury’s decision to double liquidity-support buybacks for longer-dated notes and bonds. This policy shift exerted downward pressure on the US Dollar (USD), driving it to a more than three-month low last week and creating a favorable environment for precious metals.
US Treasury rally deepens as yields see biggest two-month drop
Strategists at Deutsche Bank highlight the depth of the latest move in US rates, noting that "Treasury yields moved lower across the curve, including the 2yr (-5.9bps), 10yr (-6.8bps) and 30yr (-5.9bps)." They emphasise that "for 10yr Treasury yields this was the biggest decline in two months," underscoring the strength of the rally and the extent to which benchmark yields have retraced to their lowest levels in almost three weeks.
Compounding this bullish momentum is a pullback in crude oil prices, which has helped temper broader inflation anxieties. Lower energy costs, combined with a weakened dollar, have reinforced investor appetite for Silver as an attractive alternative asset.
Silver continues to draw fundamental support from robust industrial consumption. Demand remains particularly strong across high-growth sectors key to the global energy transition, including photovoltaic solar panel manufacturing, electric vehicle production, and the expanding infrastructure required for artificial intelligence data centers.
Traders await the upcoming US Personal Consumption Expenditures (PCE) release, the Federal Reserve’s key inflation metric. Market participants are also closely watching Fed Chair Kevin Warsh’s speech at the annual Jackson Hole symposium on Friday for clearer signals regarding a potential interest rate adjustment in September.
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.