Silver edges higher amid Fed rate cut expectations, geopolitical uncertainties
Silver (XAG/USD) rises slightly at the start of the week and trades around $50.00, up 0.20% on Monday.
  • Silver edges higher around $50.00 as the US Dollar retreats and risk appetite stabilizes.
  • Expectations of further Federal Reserve rate cuts in December continue to support precious metals.
  • Geopolitical tensions and a busy US data calendar keep investors cautious.

Silver (XAG/USD) rises slightly at the start of the week and trades around $50.00, up 0.20% on Monday. Like Gold, whose recent momentum has been driven by shifting monetary-policy expectations, the white metal benefits from a softer US Dollar (USD) as markets reassess the likelihood of another Federal Reserve (Fed) rate cut in December. Mixed messages from Fed officials have triggered profit-taking on the US Dollar, lowering the opportunity cost of holding non-yielding assets and supporting Silver.

Investors remain cautious ahead of several key macroeconomic releases this week, including US Gross Domestic Product (GDP) for the third quarter and the Personal Consumption Expenditures (PCE) Price Index, a key inflation gauge for the Fed. Market participants, who already observed range-bound price action last week in precious metals, prefer to wait for these catalysts before committing to a clear directional move.

At the same time, geopolitical risks continue to underpin Silver. The escalation of the Russia-Ukraine conflict and renewed tensions in the Middle East maintain demand for safe-haven assets, a trend also visible in recent flows into Gold.

The US Dollar’s weakness, driven by shifting rate expectations, combined with heightened geopolitical uncertainty, could continue to offer a supportive backdrop for Silver in the coming days. However, the recent consolidation phase encourages prudence ahead of mid-week US data releases, which could revive volatility across precious-metal markets.

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.

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