Despite lacking a key advantage such as central bank bullion purchases, silver continues to see strong investment and industrial demand. Rising inflation and a passive Fed may support XAG/USD. Let’s discuss this topic and outline a trading plan.
The article covers the following subjects:
Major Takeaways
- Silver has both investment and industrial demand.
- The white metal lags behind gold in terms of safe-haven status.
- Slower global GDP growth is weighing on XAG/USD.
- Long positions will be relevant if the price breaks above $77.5.
Monthly Fundamental Forecast for Silver
Safe haven or industrial metal? At first glance, silver seems to be neither one nor the other, an asset that may not deserve a place in a portfolio. However, when the world seeks stability while still betting on economic growth, the white metal regains popularity. In 2025, it surged by 130%, becoming one of the best-performing assets in financial markets, and reached an all-time high of $121 per ounce by late January 2026. This rally was fueled by speculators who, even after the bubble burst, continue to look for new buying opportunities in XAG/USD.
In reality, silver clearly lags behind gold as a safe haven. While the physical volume of silver stored in London vaults is larger, its total value is around $40 billion, a fraction compared to $1.1 trillion for gold. Moreover, due to the rally in XAU/USD, the value of gold held in central bank reserves has exceeded that of dollar-denominated assets for the first time in history.
Gold and US Dollar Assets in Central Bank Reserves
Source: Bloomberg.
Silver lacks the advantage of a strong central bank demand for bullion. Traders include it in their portfolios less actively than gold. Investment demand for the white metal comes from investor purchases of ETFs, bars, and coins.
Nevertheless, the increase in China’s silver imports to 790 tonnes in the first two months of 2026, including a record 470 tonnes in February, shows that demand always finds its place. High prices might have been expected to dampen interest, but gold is even more expensive, and silver is increasingly used as an alternative. This has led to a decline in the gold-to-silver ratio.
Gold/Silver Ratio Trends
Source: Bloomberg.
Investors are still searching for stability in an uncertain world, but they are less confident about economic growth. According to the IMF, regardless of the outcome of US–Iran negotiations, global GDP growth in 2026 is likely to fall short of the previously expected 3.3%. This could weigh on demand for commodities, including silver.
In my view, silver will continue to follow gold. Its outlook will depend on the Fed’s response to inflation. If the central bank remains on hold and refrains from raising rates, accelerating CPI will reduce real Treasury yields and support the precious metals sector. An alternative scenario is a slowdown toward recession, which would push the Fed back toward monetary easing, providing a tailwind for XAG/USD.
Monthly Trading Plan for XAG/USD
In my view, silver has little to fear. Despite ongoing uncertainty, the consolidation in XAG/USD looks more like an accumulation of long positions. A breakout above $77.5 or a rebound from support at $72 may be used to build up long positions opened at $70.5 per ounce.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of XAGUSD in real time mode
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