The price of silver (XAG/USD) continues its gains for the second day in a row, trading around $83.10 per ounce during Asian hours on Monday. Precious metals, including silver, are attracting buyers as safe haven demand rises amid rising geopolitical tensions.
Investors have closely watched the nationwide protests in Iran, which have now entered their third week and are said to have claimed hundreds of lives. US President Donald Trump warned Tehran against using force against the demonstrators and indicated possible action if the repressive campaign intensified, while Iranian officials warned against any American or Israeli intervention.
Bloomberg reported that European countries led by the United Kingdom and Germany are considering increasing their military presence in Greenland to enhance security in the Arctic. Germany may propose a joint NATO mission, while British Prime Minister Keir Starmer has urged allies to boost efforts in the Far North, following renewed statements by US President Donald Trump calling for US ownership of Greenland.
Demand for safe-haven silver is also rising as traders turn cautious amid concerns surrounding the Federal Reserve. Federal prosecutors have opened a criminal investigation into Federal Reserve Chairman Jerome Powell related to the central bank’s renovation of its Washington headquarters and whether Powell lied to Congress about the scope of the project, The New York Times reported Sunday.
Markets also weighed the possibility of further interest rate cuts by the Federal Reserve after Friday’s jobs report showed job growth was below expectations. US nonfarm payrolls rose by 50,000 in December, lower than the 56,000 in November (revised from 64,000) and weaker than market expectations of 60,000.
Traders continue to price in two interest rate cuts from the Federal Reserve this year, although the central bank is widely expected to keep policy unchanged later this month. According to CME Group’s FedWatch tool, Federal Reserve funds futures continue to be priced at a roughly 95% probability that the US central bank will keep interest rates unchanged at its meeting on January 27-28.
Frequently asked questions about silver
Silver is a precious metal that is widely traded among investors. It has been used historically as a store of value and medium of exchange. Although less popular than gold, traders may turn to silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during periods of high inflation. Investors can buy physical silver, in the form of coins or bullion, or trade it through instruments such as exchange-traded funds, which track its price in international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession could cause the price of silver to rise due to its safe-haven status, although to a lesser extent than the price of gold. As a non-yielding asset, silver tends to rise as interest rates fall. Its movements also depend on how the US dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong dollar tends to keep the price of silver at bay, while a weak dollar is likely to push prices higher. Other factors such as investment demand, mining supplies – silver is more plentiful than gold – and recycling rates can also influence prices.
Silver is widely used in industry, especially in sectors such as electronics or solar energy, as it has one of the highest electrical conductivity of all metals – more than copper and gold. A rise in demand can cause prices to rise, while a fall tends to bring them down. Dynamics in the economies of the United States, China and India can also contribute to price fluctuations: for the United States, and especially China, its large industrial sectors use silver in various processes; In India, consumer demand for the precious metal used in jewelery also plays a major role in determining prices.
Silver prices tend to follow gold movements. When gold prices rise, silver usually follows suit, as its status as a safe haven asset is similar. The gold/silver ratio, which shows how many ounces of silver are needed to equal the value of one ounce of gold, may help determine the relative valuation between the two metals. Some investors may consider a high ratio to be an indication that silver is undervalued, or that gold is undervalued. Conversely, a low ratio may indicate that gold is undervalued compared to silver.
