Silver advances for fourth consecutive day on Fed easing hopes, safe-haven appeal
- Silver advances for a fourth consecutive day, supported by persistent expectations of Fed monetary easing
- Medium-term Fed rate cut bets outweigh stronger-than-expected US macroeconomic data
- The safe-haven-friendly backdrop continues to underpin precious metals
Silver (XAG/USD) trades around $72.05 on Wednesday at the time of writing, up 0.70% on the day. The white metal extends its bullish momentum for a fourth straight day and reached a fresh all-time high at $72.71 earlier in the day, highlighting sustained investor appetite for precious metals.
Expectations of an accommodative monetary policy from the Federal Reserve (Fed) remain a key driver. According to the CME FedWatch tool, markets see more than a 70% chance of cumulative interest rate cuts of at least 50 basis points by 2026. These expectations contrast with the Fed’s official projections, as the latest dot plot points to the Federal Funds Rate near 3.4% by the end of 2026, suggesting limited room for additional cuts.
In this context, the prospect of sustainably lower interest rates continues to favor non-yielding assets such as Silver. In theory, falling yields reduce the opportunity cost of holding precious metals, enhancing their appeal among institutional investors and speculative flows.
Recent US macroeconomic data have not derailed this trend. Third-quarter Gross Domestic Product (GDP) in the United States (US) showed robust growth of 4.3% YoY, well above market expectations. Despite this positive surprise, investors remain focused on the medium-term outlook, centered on gradually easing inflation and signals of future monetary accommodation.
Silver is also benefiting from a broader safe-haven environment. Persistent geopolitical uncertainties, ongoing market volatility and structural weakness in the US Dollar (USD) continue to support demand for precious metals. The recent consolidation in Gold below record highs has not dampened enthusiasm for Silver, which is benefiting from a catch-up effect and a strong speculative component.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.