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

Silver retreats after US midterm results point to Democrats taking control of the House.
Markets face renewed uncertainty about the course of US fiscal policy following the political shift.
Non-yielding Silver finds limited support from cheaper oil, but expectations of a December Fed rate hike persist.

Selling pressure keeps Silver (XAG/USD) close to its one-year low, with the metal trading around $49.20 per troy ounce in Wednesday’s Asian session as losses extend into a second successive day. The one-year low of $48.62 was recorded on 3 November. Democrats have secured a majority in the US House of Representatives, wresting control from Republicans. The outcome opens up the possibility of changes in congressional leadership, bringing renewed uncertainty about the direction of US fiscal policy.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

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

Some support for non-yielding Silver has come from lower oil prices, which have eased inflation concerns. Crude nevertheless remains close to a four-week low amid mixed signals over US-Iran negotiations. Following reported US airstrikes on Iran’s Qeshm Island, Tehran and Washington are assessing proposals put forward by mediators. Cheaper energy could temper expectations that monetary tightening will continue for an extended period. However, the CME FedWatch Tool shows that markets still assign a 78% probability to a Federal Reserve rate hike in December.

Chart Analysis XAG/USD — What does the XAG/USD daily chart show?

What does a ratio of 80 reveal about silver’s underperformance against gold?

The relative performance of the two precious metals makes silver’s recent weakness particularly clear, according to Commerzbank. The bank describes silver as “significantly underperforming gold, as reflected in the rise in the gold/silver ratio to 80.” The increase in the ratio highlights the scale of silver’s decline relative to gold: the latest downward move in the white metal has been markedly sharper than that in the yellow metal.

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

Common questions about Silver

What attracts investors to Silver?

Widely traded by investors, Silver is a precious metal with a long history as both a store of value and a means of exchange. Gold remains more popular, but traders may choose Silver for its intrinsic value, to diversify an investment portfolio or as a possible hedge when inflation is high. Exposure can be obtained by purchasing physical Silver coins or bars, or by using instruments such as Exchange Traded Funds that follow its price in international markets.

What drives movements in Silver prices?

A broad set of influences can drive Silver prices. Its safe-haven appeal can push prices higher during geopolitical turmoil or when fears of a deep recession intensify, although this effect is less pronounced than for Gold. Lower interest rates generally favour Silver because it offers no yield. The US Dollar (USD) is another important influence, since the metal is quoted in dollars (XAG/USD): a stronger Dollar usually restrains Silver prices, while a weaker Dollar is likely to lift them. Investment demand, recycling rates and mining supply also matter, with Silver far more abundant than Gold.

How important is industrial demand for Silver prices?

With electrical conductivity among the highest of any metal, exceeding that of Copper and Gold, Silver has extensive industrial applications, especially in electronics and solar energy. Stronger demand can lift prices, whereas weaker demand generally brings them down. Economic conditions in the US, China and India can also cause price fluctuations. Large industrial sectors in the US and, especially, China use Silver across a range of processes. In India, consumer demand for Silver jewellery is also an important determinant of prices.

How closely does Silver track changes in Gold prices?

Gold often sets the direction for Silver, which typically rises alongside it because both metals have similar safe-haven status. Investors may assess their relative valuations using the Gold/Silver ratio. This measures how many ounces of Silver equal the value of one ounce of Gold. A high reading may be interpreted by some investors as a sign that Silver is undervalued or Gold overvalued. A low reading, by contrast, might indicate that Gold is undervalued compared with Silver.