Silver declines as US shutdown resolution eases safe-haven demand

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Silver (XAG/USD) declines on Thursday, ending a four-day winning streak. The grey metal trades around $53.00 at the time of writing, down 0.35% on the day, after marking an intraday high at $54.39, just shy of the all-time high at $54.86.

Silver pulls back around $53.00 after hitting an intraday high of $54.39.
Improved market sentiment following the end of the US government shutdown slightly reduces safe-haven demand.
Federal Reserve policy expectations remain mixed as recent hawkish remarks temper rate-cut bets.

The market mood has improved after the announcement of the end of the US government shutdown. President Donald Trump has officially signed the temporary funding bill, allowing federal operations to resume after the longest budget impasse in US history. This resolution eases part of the political risk that had recently supported Silver.

On the macroeconomic front, however, Silver remains underpinned by lingering uncertainty surrounding the US economic outlook and the policy path of the Federal Reserve (Fed) while this week’s labor data continue to point to a cooling job market. The ADP Employment Change report indicated an average of 11,250 job losses per week over the four weeks to October 25, reinforcing expectations of a dovish turn.

However, prospects for a December rate cut have partly faded. According to the CME FedWatch tool, markets now price nearly a 53% chance of a 25-basis-point cut in December, down from 63% a day earlier. This shift reflects a firmer tone from several Fed officials. Atlanta Fed President Raphael Bostic warned on Wednesday that easing policy too soon could “feed the inflation beast,” while noting that a sharp downturn in the labor market is unlikely in the near term.

For now, Silver is consolidating its strong recent gains, supported by a generally constructive macro backdrop but held back by a slight improvement in risk sentiment and more cautious Fed communication. Traders will now focus on the gradual return of US data releases, which could add volatility to precious metals in the coming days.

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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