Silver Price Forecast: XAG/USD rises to near $31.50 amid softer US Dollar

• Silver prices advance as dollar-denominated metals become more affordable, supported by a weaker US Dollar.
• The grey metal finds support from safe-haven inflows as tensions in the Russia-Ukraine conflict escalate.
• Non-interest-bearing assets encountered headwinds after Fed Chair Jerome Powell dampened expectations of imminent rate cuts.

Silver price (XAG/USD) continues to gain ground for the second consecutive day, trading around $31.40 per troy ounce during the Asian session on Tuesday. The prices of the dollar-denominated Silver recover from two-month lows as the US Dollar (USD) experiences profit-taking selling after a recent rally. This rally was fueled by expectations of fewer Federal Reserve (Fed) rate cuts and optimism about US economic outperformance under the incoming Trump administration.

Meanwhile, safe-haven Silver is gaining traction amid rising geopolitical tensions. US President Joe Biden authorized Ukraine to use US-made weapons for strikes deep within Russia, a move that escalated concerns in the region. In response, the Kremlin issued a warning on Monday, vowing to retaliate against what it called a reckless decision by the Biden administration. Russia had earlier cautioned that such actions could significantly increase the risk of confrontation with NATO.

Non-yielding assets like Silver faced headwinds after Fed Chair Jerome Powell tempered expectations of immediate rate cuts. Powell emphasized the economy's strength, a robust labor market, and ongoing inflationary pressures. He stated, "The economy is not sending any signals that we need to be in a hurry to lower rates." Investors now await additional remarks from Fed officials this week for further insight into the trajectory of US interest rates.

Markets are closely monitoring China's upcoming Loan Prime Rate (LPR) decision, anticipating potential additional stimulus measures to support economic growth. This follows the recent 10 trillion Yuan debt package, which did not include direct economic stimulus, heightening market concerns. As one of the world's largest manufacturing hubs for electronics, solar panels, and automotive components, China's industrial demand for Silver remains a key factor influencing its prices.