Silver Price Forecast: XAG/USD hovers near $49.00 at one-year lows as US politics shift

• US midterm results point to Democratic control of the House, weighing on silver.
• The outlook for US fiscal policy becomes less certain as the political balance shifts.
• Lower oil prices lend modest support to non-yielding silver, but a December Fed rate rise remains priced into markets.

At around $49.20 per troy ounce in Wednesday’s Asian session, silver (XAG/USD) is lower for a second consecutive day. The metal remains close to its one-year low of $48.62, reached on 3 November, as Democrats secured a majority in the US House of Representatives, wresting control from Republicans. The change creates scope for new congressional leadership and adds uncertainty to the outlook for US fiscal policy.

Control of Congress for the final two years of US President Donald Trump’s term was at stake as Americans cast their midterm election votes on Tuesday. Live figures from Decision Desk HQ show that 253 of the 435 House seats have been called. Democrats have secured 152 and Republicans 101, with 218 required for a majority.

Lower oil prices have eased inflation concerns, offering some support to silver, which pays no yield. Crude nevertheless remains near a four-week low amid mixed signals surrounding US-Iran negotiations. Following reported US airstrikes on Iran’s Qeshm Island, proposals put forward by mediators are being reviewed by Tehran and Washington. Cheaper energy could temper expectations of an extended period of monetary tightening. Even so, the CME FedWatch Tool shows that markets continue to price in a 78% probability of a Federal Reserve rate rise in December.

Silver underperforms gold as ratio reaches 80

The rise in the gold/silver ratio highlights silver’s recent relative weakness, according to Commerzbank, which describes the metal as “significantly underperforming gold, as reflected in the rise in the gold/silver ratio to 80.” The widening gap illustrates how much more sharply silver has declined than gold, underlining that the white metal’s latest downward leg has been considerably more pronounced than the yellow metal’s move.

(The technical analysis of this story was written with the help of an AI tool. Know more.)