Silver Price Forecast: Why is XAG/USD falling below $54.00 as safe-haven demand eases?

Silver prices remain under pressure following US President Donald Trump’s decision to rule out immediate military strikes against Iran.
Geopolitical concerns persist amid the prospect of post-election strikes, the risk of Iranian retaliation and continued Houthi attacks in Saudi Arabia.
A Fed rate pause in October carries a 90.6% probability, according to market pricing.

Easing safe-haven demand is weighing on Silver (XAG/USD), which trades near $53.70 per troy ounce during Asian trading hours after retreating from a gap-up opening. Demand has softened following US President Donald Trump’s decision to rule out immediate military action against Iran. In comments to Al Jazeera, Trump said, “There will not be a strike today.” Nevertheless, investors remain uneasy about strikes potentially resuming after this week’s Israeli elections and next week’s US midterm elections. Reports suggest that Iran is ready to retaliate with attacks on Israel and the UAE.

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

Tensions across the Arabian Peninsula also remain high. According to Reuters, Yemen’s Houthis said on Sunday that attacks on Saudi Arabia’s King Khalid Airport in Riyadh would continue. Their declaration came only hours after Saudi officials announced the resumption of flight operations. The weekend saw hostilities intensify: the Houthis claimed attacks on the airport and Saudi oil facilities on Saturday, while Saudi Arabia said on Sunday that it had intercepted further incoming missiles and drones as partial airport operations were restored.

Global energy prices remain on an upward trajectory as the wider Middle East conflict persists, heightening inflation worries and strengthening expectations of higher interest rates. Such rate expectations generally weigh on assets that offer no yield, including Silver and other precious metals.

The Federal Reserve’s forthcoming policy decision is now a key focus for traders. Expectations broadly favour unchanged interest rates, with a possible hike to follow in December. Market pricing puts the likelihood of a pause at the October 27–28 policy meeting at 90.6% and the probability of a December increase at 79.7%, according to the CME FedWatch Tool.

Can gold hold key support amid CTA selling pressure?

The scale of systematic selling that has weighed on gold recently was highlighted by strategists at TD Securities, who noted, "CTAs have been heavy sellers of gold, with prices now reaching key support levels,"

Common questions about Silver

What draws investors to Silver?

Actively traded by investors, Silver is a precious metal with a long history as both a store of value and a means of exchange. Gold attracts greater interest, but traders may choose Silver for its intrinsic value, to diversify their investment portfolios or as a possible hedge against high inflation. Physical investment is available through Silver coins and bars. Alternatively, investors can gain exposure through instruments such as Exchange Traded Funds that follow its price in international markets.

What drives movements in Silver prices?

A broad mix of influences can drive Silver prices. Its safe-haven appeal can lift prices during geopolitical turmoil or concerns about a severe recession, though this effect is less pronounced than for Gold. Lower interest rates generally support Silver because it pays no yield. The US Dollar (USD) is another key influence, given that Silver is priced in dollars (XAG/USD): Dollar strength usually restrains prices, while a weaker Dollar is likely to lift them. Investment demand, recycling rates and mine supply also matter, with Silver far more abundant than Gold.

How does industrial consumption influence 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. Prices can rise when demand surges and tend to fall when it weakens. Developments in the US, Chinese and Indian economies can also drive price fluctuations. Large industrial sectors in the US and, especially, China use Silver across a range of processes, while Indian consumer demand for Silver jewellery is also an important influence on prices.

What is the link between Silver and Gold prices?

Given their similar safe-haven status, Silver generally tracks Gold’s price movements and typically gains when Gold advances. To assess their relative valuations, investors may use the Gold/Silver ratio, which measures how many ounces of Silver equal the value of one ounce of Gold. A high ratio may be viewed by some investors as a sign that Silver is undervalued or Gold overvalued. Conversely, a low ratio could indicate that Gold is undervalued compared with Silver.