Silver Price Forecast: XAG/USD falls below $50.50 amid US attacks on Iran’s Qeshm Island

Silver faces a possible decline towards its 11-month low of $48.87 after covert US military strikes on Iran's Qeshm Island.
Inflation concerns persist amid Middle East tensions and elevated energy prices, keeping the probability of a December Fed rate hike at 73%.
Precious metals face additional selling pressure from technology share liquidations and uncertainty surrounding the US midterm elections.

Silver (XAG/USD) remains under pressure near an 11-month low as fears over oil supplies intensify following a United States (US) attack on Iran’s Qeshm Island. After posting modest gains a day earlier, the metal trades lower at around $50.30 per troy ounce during Tuesday’s Asian session. Prices remain close to the $48.87 per ounce low recorded on 30 October.

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

Citing US officials, the Wall Street Journal reported that Monday’s raid formed part of a series of limited, covert strikes Washington has carried out against Iranian targets in recent weeks. These military operations follow US President Donald Trump’s recent efforts to temper expectations of a full-scale resumption of war with Iran after Tuesday’s midterm elections.

Iran’s Islamic Revolutionary Guard Corps (IRGC) intercepted and shot down two US MQM-170 drones south of Qeshm Island in the Strait of Hormuz, according to Iranian state media outlet Press TV. The report also said the IRGC destroyed a 55th US MQ-9 drone east of the strategic waterway.

Persistent selling has weighed on precious metals, including Silver, throughout the year. Continued hostilities in the Middle East have pushed energy costs higher, intensifying inflation risks and prompting central banks to retain a hawkish monetary policy stance. The CME FedWatch Tool currently puts the probability of a US Federal Reserve rate hike in December at approximately 73%.

Widespread asset liquidations across global markets followed a broader worldwide sell-off in technology and artificial intelligence shares. Alongside these developments, investors are watching the US midterm elections as high energy prices and inflation concerns draw increasing political scrutiny towards the Trump administration and the Republican Party.

Could Democratic momentum shift power in the US midterms?

With assessments of electoral prospects increasingly favouring the Democratic Party, Brown Brothers Harriman strategists say the focus is shifting to Tuesday’s US midterm elections. Their observation that “Democrats are widely expected to win the House of Representatives,” alongside the assessment that “Senate control is much closer, but the tide favors the Democratic Party,” highlights expectations of a possible change in the balance of power in Congress.

Common questions about Silver

What attracts investors to Silver?

Widely traded by investors, Silver has historically served both as a store of value and as a medium of exchange. While Gold remains more popular, Silver may appeal to traders seeking portfolio diversification, intrinsic value or a potential hedge against high inflation. Exposure can be gained by purchasing physical Silver in the form of coins or bars, or through instruments such as Exchange Traded Funds that track its price in international markets.

What drives changes in Silver prices?

A broad set of influences can drive Silver prices. Its safe-haven appeal can lift prices during geopolitical instability or concerns over a deep recession, though the effect is generally weaker than for Gold. 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) matter too: Dollar strength typically restrains Silver prices, while weakness is likely to lift them. Investment demand, supply from mining and recycling rates are other price drivers, with Silver far more abundant than Gold.

Why does industrial demand matter for Silver prices?

With electrical conductivity among the highest of any metal, exceeding that of Copper and Gold, Silver has extensive industrial applications, notably in electronics and solar energy. A sharp increase in demand can push prices higher, whereas weaker demand tends to weigh on them. Economic developments in the US, China and India can also cause price fluctuations. Large industrial sectors in the US and, especially, China use Silver across various processes, while Indian consumers’ demand for Silver jewellery is another important influence on prices.

How closely does Silver track Gold prices?

Gold’s price movements often set the direction for Silver. A rise in Gold typically brings a similar move in Silver, reflecting their comparable roles as safe-haven assets. Investors may assess their relative valuations using the Gold/Silver ratio, which measures how many ounces of Silver equal the value of one ounce of Gold. Some investors interpret a high ratio as a sign that Silver is undervalued or Gold is overvalued. A low ratio, by contrast, may indicate that Gold is undervalued compared with Silver.