Silver edges higher as risk-off mood, Fed uncertainty drive demand

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Silver benefits from renewed risk-off sentiment as global equities retreat.
Persistent divergence within the Fed complicates expectations for upcoming policy decisions.
Traders await delayed US data releases, especially Thursday’s September NFP report.

Silver (XAG/USD) edges higher on Tuesday, trading around $50.70 at the time of writing, up 1.00% on the day. The precious metal is supported by a broad risk-off tone across markets, with investors favoring safe-haven exposure as risk assets come under pressure. This cautious mood comes ahead of long-delayed US economic releases, most notably the September Nonfarm Payrolls (NFP) report scheduled for Thursday.

Global equities are broadly lower, fueling demand for defensive assets. Investors remain hesitant as the flow of US macroeconomic indicators has been disrupted in recent weeks, complicating assessments of real-time labor market momentum. The upcoming NFP report keeps market participants on hold, mechanically reinforcing the appeal of precious metals.

Diverging commentary from Federal Reserve (Fed) officials adds another layer of uncertainty. Governor Christopher Waller struck a distinctly dovish tone, describing the labor market as “weak” and near “stall-speed.” He reiterated that a 25-basis-point rate cut at the December meeting would provide “additional insurance” against the economic slowdown. By contrast, several other Fed members signaled caution, arguing that it may still be premature to ease policy while inflation remains above target.

This divergence is reflected in market pricing. According to the CME FedWatch tool, the chance of a December rate cut now stands at 46.6%, down sharply from 66.9% one week earlier. Investors expect the gradual release of the statistical backlog to improve visibility. Initial Jobless Claims came in at 232,000, while Continuing Claims rose to 1.957 million for the week ending October 18, reinforcing signs of cooling labor conditions.

In this environment of partial macro uncertainty, Silver benefits from its safe-haven characteristics. Expectations of medium-term monetary easing from the Fed, although reduced, continue to provide structural support for the metal, while political and economic uncertainty sustains steady but cautious demand.

Silver FAQs

Why do people invest in Silver?

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.

Which factors influence Silver prices?

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.

How does industrial demand affect Silver 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.

How do Silver prices react to Gold’s moves?

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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