Silver price (XAG/USD) has increased, currently trading around $32.60 amid a weakened US dollar following unsatisfactory US economic data. The US Composite PMI decreased to 50.4 in February, while Manufacturing PMI rose to 51.6, and Services PMI dropped to 49.7. Additionally, Initial Jobless Claims rose to 219,000, surpassing expectations.
Geopolitical uncertainties continue to support Silver, particularly with threats of new tariffs on key sectors by the US. Ongoing developments in the Russia-Ukraine conflict are also influencing market dynamics, with EU leaders set to meet on March 6 to discuss further support for Ukraine.
In Germany, the Christian Democratic Union (CDU) and its ally won, shifting attention to coalition-building processes. This stable leadership is perceived as important for fiscal reforms.
Silver remains an attractive investment due to its historical use as a store of value. Its price is affected by various factors including geopolitical stability, interest rates, and industrial demand, as it is widely used in electronics and solar energy.
The relationship between Silver and Gold is notable, with Silver prices often mirroring Gold’s movements. The Gold/Silver ratio helps investors assess relative valuations of the two metals.
Given the softer US dollar, largely attributed to weaker economic data, demand for silver has stayed firm. The US Composite PMI barely held above 50, suggesting sluggish growth, while the dip in Services PMI below this threshold points to contraction. At the same time, new jobless claims exceeded forecasts, reinforcing concerns over labour market softness. All of this combined has placed downward pressure on the greenback, making metals priced in dollars more attractive to investors.
Beyond the US economic picture, geopolitical uncertainty continues to lend support to silver prices. Discussions of additional tariffs by Washington on key industries—likely with China in mind—add another layer of unpredictability. Meanwhile, the ongoing war in Ukraine remains a dominant issue, with leaders from Brussels preparing to assess further aid options in their upcoming March gathering. Any heightened tensions or fresh sanctions could increase haven demand.
Political stability in Europe also remains on watch, particularly after the CDU’s success in Germany. Since this party has traditionally been seen as fiscally disciplined, markets are now watching how any coalition-building may shape economic policy. If Germany moves towards more spending restraint, it could influence European bond yields, indirectly affecting precious metals.
Silver’s appeal extends beyond its status as an alternative to paper currencies. Industries continue to rely on it heavily, particularly in technology and renewable energy—sectors unlikely to see a slowdown in demand any time soon. With solar panel production remaining high and interest in electrification growing, industrial consumption remains a tailwind.
We tend to track silver alongside gold, as their movement patterns often align. The Gold/Silver ratio continues to be a key indicator here, helping investors gauge whether one metal is comparatively undervalued relative to the other. When this ratio shifts dramatically, it raises questions about potential corrections in either direction.
Taken together, these elements suggest that volatility in silver should not be underestimated in the near term.
