Silver Hits Monthly Highs Above $32.50 Amid US Fiscal Concerns and Geopolitical Tensions

Silver Price Forecast: XAG/USD Records Monthly Highs Above $32.50 on Safe-Haven Buying

May 23, 2025 – The silver price (XAG/USD) extended its rally on Thursday, rising to approximately $32.60 per troy ounce during the Asian session. This marks the third consecutive daily gain and the highest price in over a month, fueled by increased safe-haven demand amid growing fiscal concerns in the United States and rising geopolitical tensions globally.

The surge in silver comes after Moody’s Investors Service downgraded the US credit rating from Aaa to Aa1, mirroring similar moves made by Fitch in 2023 and Standard & Poor’s in 2011. According to Moody’s, the US is on a trajectory where federal debt could reach 134% of GDP by 2035, up from 98% in 2023, and the budget deficit may widen to nearly 9% of GDP. Key drivers of this outlook include rising debt servicing costs, expanding entitlement programs, and reduced tax revenues.

In parallel, tensions in the Middle East have worsened, further supporting safe-haven flows. Israeli Prime Minister Benjamin Netanyahu has threatened a full military offensive to reclaim control of Gaza if hostage negotiations fail. While Israel permitted 100 aid vehicles into Gaza on Wednesday, UN officials reported that no aid had yet reached civilians due to logistical and distribution issues.

Meanwhile, geopolitical instability is also rising in Europe. Reports indicate that Ukraine is urging the European Union to seize Russian-owned property after President Donald Trump appeared to ease his stance on imposing stricter sanctions on Russia. This move has raised concern among US allies and investors about Washington's long-term policy direction regarding the conflict in Eastern Europe.

These combined macroeconomic and geopolitical developments have strengthened investor appetite for precious metals, traditionally seen as a hedge during periods of uncertainty. Silver, in particular, has seen strong interest due to its dual role as a safe-haven asset and an industrial metal, especially in an environment of volatile economic expectations.

As long as risk sentiment remains fragile, XAG/USD may continue to trade higher, with technical resistance next seen near $33.00, while support lies around $32.00.