Silver price consolidates as USD rebounds, Fed rate cut outlook supports demand

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Silver trades slightly lower as the US Dollar attempts to recover.
Expectations of a December Fed rate cut continue to limit downside pressure on the metal.
Geopolitical tensions and uncertainty around US data releases keep safe-haven demand supported.

Silver (XAG/USD) drifts slightly lower on Thursday, trading around $53.25, down 0.15% on the day at the time of writing. The white metal remains range-bound amid thin liquidity associated with the US Thanksgiving holiday. A modest rebound in the US Dollar (USD) is capping intraday gains and keeping Silver contained.

Despite this consolidation, the broader macro backdrop remains supportive for precious metals. Several Federal Reserve (Fed) officials have recently signaled openness to near-term easing, reinforcing market expectations that the central bank could deliver another 25-basis-point rate cut at its December meeting. This outlook continues to weigh structurally on the US Dollar, helping to limit any significant pullback in XAG/USD.

At the same time, improving sentiment in global Equity markets, driven by rising confidence in Fed easing, somewhat reduces demand for safe-haven assets. However, this effect is partially offset by persistent geopolitical risks. Tensions between China and Taiwan have resurfaced after Beijing issued new warnings to Japan, while investors are closely monitoring signals of progress on a US-backed framework for peace talks between Russia and Ukraine. These factors maintain a moderate level of caution, indirectly supporting Silver.

In the United States (US), the US Dollar Index (DXY) is stabilizing after recent declines, holding slightly above its weekly lows. Recent US economic releases, including mixed manufacturing data, signs of labor-market softening and weaker consumer momentum, reinforce expectations of a slowing economic backdrop.

Earlier reports this week already highlighted similar concerns, keeping the market focused on the Fed’s next steps. Meanwhile, US markets are closed on Thursday, and delayed data releases limit short-term visibility.

Overall, Silver remains close to its recent highs, supported by a macro environment that still favors precious metals. However, thin trading conditions may keep XAG/USD in consolidation until US participants return.

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.