Silver Price Forecast: XAG/USD rises to near $66.00 as US-10 year yield slides

Silver prices have risen in the second consecutive day, trading near $65.80 per troy ounce during the Asian session on Friday. Lower oil prices provided support for non-yielding Silver, as easing inflation concerns helped push government bond yields down. Falling crude prices resulted from reports that Saudi Arabia was working to restore flows through its East-West pipeline, while traders focused on upcoming meetings between US President Donald Trump and Gulf leaders.

US Treasury yields retreated from recent multi-year highs, with the benchmark 10-year yield falling to approximately 4.93% after briefly exceeding 5.0% earlier in the week. Strategists at Societe Generale attribute the bond market's improvement to lower oil and gas prices at the beginning of the session, following news that the US plans to resume Iran-related negotiations with Gulf States next week.

Initially, sellers took advantage of the hawkish Federal Reserve's rate hike prediction, causing 10-year Treasury yields to dip to 4.93%, before recovering to 5.02% in Asia. Federal Reserve Chair Kevin Warsh expressed a hawkish stance, stating that inflation has been too high for too long and that recent summer economic data failed to show significant structural improvement.

Consequently, market expectations shifted, with the CME FedWatch tool indicating a 53.1% probability of another rate hike at the Federal Reserve's October meeting, up from 44% the previous day. Silver is a precious metal widely traded among investors, often used as a store of value and medium of exchange. While less popular than gold, Silver may be sought by traders for its intrinsic value or as a hedge during high-inflation periods.

Investors can acquire physical Silver, either in coins or bars, or trade it via Exchange Traded Funds that track its price on international markets. Silver's price movements depend on various factors, such as geopolitical instability, recession fears, and the US Dollar's behavior, as it is priced in dollars (XAG/USD). A strong Dollar tends to keep Silver prices low, whereas a weaker Dollar can boost its value.

Other factors influencing Silver include investment demand, mining supply, and recycling rates. Silver is extensively utilized in industries like electronics and solar energy due to its high electrical conductivity, surpassing that of copper and gold. A surge in industrial demand can drive Silver prices up, while a decline can lower them.

Silver prices tend to mirror Gold's movements, as both are considered safe-haven assets. The Gold/Silver ratio, indicating the number of Silver ounces required to match the value of one ounce of Gold, can help determine the relative valuation of both metals. Some investors may view a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. Conversely, a low ratio might suggest that Gold is undervalued relative to Silver.