It all started with geopolitical factors, continued with US tariffs and the Fed’s federal funds rate, and is ending with political turmoil. Against this backdrop, precious metals are shining brightly in 2025. Let’s discuss this topic and make a trading plan for the XAGUSD.
The article covers the following subjects:
Major Takeaways
- Silver is growing at a record pace.
- Precious metals are outperforming gold.
- Stagflation and political factors are boosting the XAGUSD.
- Silver can be purchased with targets of $51.7 and $53.
Quarterly Fundamental Forecast for Silver
Politics is a dirty, ruthless business. Those who believe this should buy precious metals. Unlike currencies, bonds, and even stocks, gold, silver, and similar commodities are immune to political turmoil. Investors buy these instruments amid shocks related to legislative or executive power. In 2025, such upheavals are in abundance. As a result, XAGUSD quotes are showing their best performance in many years and are approaching a new record high.
Yearly Performance of Silver Prices
Source: Wall Street Journal.
The rally in precious metals can be divided into four stages. The first began after the outbreak of armed conflict in Ukraine and the West’s freezing of Russia’s gold and foreign exchange reserves. As a result, central banks turned to de-dollarization practices and diversified their reserves. In 2025, the share of gold in terms of value exceeded that of the euro. If the indicator equals the share of US assets, including the dollar and US Treasury bond yields, gold will likely skyrocket to $8,500 per ounce, according to Eurizon.
The second stage began after the US administration introduced sweeping tariffs on Liberation Day in April. Confidence in the US dollar eroded. Moreover, Donald Trump demanded that the Fed lower interest rates, which is seen as a blow to the central bank’s independence.
The Fed’s shift in focus from inflation to the labor market in August, as announced by Jerome Powell in Jackson Hole, triggered the third stage of the precious metals rally. If the US regulator stops protecting the economy from accelerating consumer prices, then gold and its peers may serve as a defensive asset.
Finally, the fourth stage was marked by the US government shutdown, the political crisis in France, and the change of prime minister in Japan. On the one hand, all these events slow down GDP growth. On the other hand, they increase the national debt. All this hits financial stability and confidence in fiat currencies. The current shutdown of the US government has triggered the fastest rally in gold and other precious metals in history.
Gold Performance During US Shutdowns
Source: Wall Street Journal.
In contrast to gold, industry actively uses silver, platinum, and palladium. These metals tend to rise rapidly when the Fed cuts rates and the economy is performing well. In essence, this is the current state of affairs. At the same time, accelerating inflation is creating a stagflationary backdrop, allowing the XAGUSD to outperform the XAUUSD.
Meanwhile, Morgan Stanley projects a shift in the near future, with gold expected to outperform all other assets. However, the bank forecasts that silver will surge to $50.2 per ounce in 2026.
Quarterly Trading Plan for XAGUSD
In this connection, investors turn to precious metals amid political turmoil. Coupled with a favorable backdrop, the upward trend in XAGUSD quotes will likely persist. Long trades can be considered with the targets of $51.7 and $53 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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