$54.00 gives way: Silver Price Forecast as XAG/USD retreats amid weaker safe-haven demand

US President Donald Trump’s decision to rule out immediate military strikes against Iran puts pressure on Silver prices.
Geopolitical concerns persist amid the prospect of post-election strikes, possible Iranian retaliation and continued Houthi attacks in Saudi Arabia.
90.6% is the market-implied probability of a Fed rate pause in October.

Silver (XAG/USD) trades near $53.70 per troy ounce during Asian hours. The metal has retreated after opening with a bullish gap. Safe-haven demand has softened following US President Donald Trump’s decision to rule out immediate military action against Iran. In remarks to Al Jazeera, Trump said, “There will not be a strike today.” Nevertheless, markets remain concerned that strikes could resume after this week’s Israeli elections and next week’s US midterm elections. Reports indicate that Iran is ready to retaliate by targeting Israel and the UAE.

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

Across the Arabian Peninsula, regional tensions remain high. According to Reuters, Yemen’s Houthis said on Sunday that they would continue targeting Saudi Arabia’s King Khalid Airport in Riyadh. The statement came only hours after Saudi officials announced the resumption of flight operations. Over the weekend, hostilities intensified: the Houthis claimed attacks on the airport and Saudi oil facilities on Saturday. Saudi Arabia said it intercepted further incoming missiles and drones on Sunday as it restored partial airport operations.

Global energy prices continue to rise amid the broader Middle East conflict. This is fuelling inflation concerns and strengthening expectations of higher interest rates. Such rate expectations generally weigh on non-yielding assets, including Silver and other precious metals.

Attention now turns to the Federal Reserve’s forthcoming policy decision. Markets widely expect the central bank to leave interest rates unchanged, with a possible increase to follow in December. The CME FedWatch Tool puts the market-implied probability of a pause at the October 27–28 policy meeting at 90.6%, while pricing indicates a 79.7% chance of a December rate rise.

Gold nears key support as CTA selling intensifies

TD Securities strategists highlighted the scale of recent systematic selling pressure on gold, saying, "CTAs have been heavy sellers of gold, with prices now reaching key support levels," as the metal continues to feel the impact.

Silver: key questions

What attracts investors to Silver?

Widely traded by investors, Silver has historically served as both a store of value and a medium of exchange. Gold remains more popular, but traders may choose Silver for portfolio diversification, its intrinsic value or its potential to hedge against high inflation. Exposure can come through physical coins and bars or instruments such as exchange-traded funds, which follow Silver’s price in international markets.

What drives Silver prices?

Several forces shape Silver prices. During geopolitical instability or fears of a severe recession, its safe-haven appeal can lift prices, though usually less than Gold’s. Lower interest rates also tend to support Silver because it offers no yield. Since the metal is quoted in US dollars (XAG/USD), movements in the US Dollar (USD) are another key influence. Dollar strength generally restrains Silver prices, while weakness is likely to lift them. Investment demand, mine supply and recycling rates also matter. Silver is far more abundant than Gold.

How does industrial demand shape Silver prices?

With electrical conductivity among the highest of any metal, exceeding both Copper and Gold, Silver has extensive industrial applications, notably in electronics and solar energy. A sharp increase in demand can lift prices; weaker demand tends to depress them. Economic developments in the US, China and India can also drive price fluctuations. The large industrial sectors in the US and, especially, China use Silver across numerous processes. In India, consumer demand for Silver jewellery is also an important price driver.

How closely does Silver track Gold?

Gold’s price movements often set the direction for Silver. A rise in Gold typically brings a similar move in Silver, reflecting their shared safe-haven characteristics. To assess their relative valuations, investors may use the Gold/Silver ratio: the number of ounces of Silver equivalent in value to one ounce of Gold. A high reading may be interpreted by some investors as evidence that Silver is undervalued or Gold is overvalued. A low reading, by contrast, could indicate that Gold is undervalued relative to Silver.