XAG/USD pulls back to 117.50 following its peak at record levels

Silver reached an unprecedented price of $119.42, propelled by significant safe-haven demand in the face of economic and geopolitical instability.

Investor interest in Silver remained robust despite a stronger USD, indicating ongoing hedging against currency risks.

The demand for Silver as a safe haven intensified due to global trade tensions and heightened geopolitical threats.

Silver Price Outlook: XAG/USD declines towards 117.50 after achieving record highs.

The price of Silver (XAG/USD) maintains its upward trajectory that commenced on January 22, trading at approximately $117.70 per troy ounce during the Asian trading session on Thursday. Earlier, Silver prices soared to a new record high of $119.42, bolstered by sustained safe-haven demand amid economic and geopolitical uncertainties. The grey metal has increased by over 65% thus far this month.

Investor enthusiasm for precious metals, including Silver, has remained strong despite a recovery in the US Dollar (USD), underscoring significant hedging demand against currency fluctuations. US Treasury Secretary Scott Bessent reaffirmed the US's dedication to a strong dollar policy, while the Federal Reserve opted to keep interest rates steady during its January meeting, citing persistently high inflation and robust economic growth.

Federal Reserve Chair Jerome Powell indicated that job growth has slowed and the unemployment rate is stabilizing. He noted that the Fed is "well positioned" to evaluate data on a meeting-by-meeting basis and is not following a predetermined course for future interest rate decisions.

The demand for safe-haven precious metals, such as Silver, has increased in light of global trade tensions. The resurgence of protectionist language ahead of the US elections has raised worries regarding tariffs, disruptions in supply chains, and inflationary pressures. Additionally, market sentiment has been further weakened by concerns over a possible US government shutdown, which could postpone the release of important economic data.

Geopolitical risks have remained high due to rising tensions in the Middle East. On Wednesday, US President Donald Trump called on Iran to return to discussions regarding its nuclear program, cautioning that any future US military action would be significantly more severe. In response, Tehran has threatened retaliation against the US, Israel, and their allies, according to Reuters.

Concurrently, robust industrial demand from the renewable energy and electronics sectors has continued to tighten supply, bolstering Silver’s upward trend. Prices have also been buoyed by investors looking for more affordable alternatives to Gold, in addition to supply limitations and momentum-driven purchasing.