Silver (XAG/USD) trades around $52.60 on Friday at the time of writing, up 0.50% on the day. The precious metal regains traction as investors turn to safe-haven assets, while US economic data remains severely disrupted after the federal government’s reopening.
Uncertainty continues to dominate the macro environment. Early private-sector readings for October point to a cooling labor market and weakening consumer confidence, while inflation concerns persist. The Director of the US National Economic Council, Kevin Hassett, warned that some October data may “never materialize” after agencies were unable to collect information during the shutdown. This situation complicates the assessment of US economic momentum and supports safe-haven flows into Silver.
However, the upside remains capped by shifting monetary policy expectations. Recent cautious remarks from officials of the Federal Reserve (Fed) have reduced the chance of a rate cut in December, a negative factor for a non-interest-bearing asset. According to the CME FedWatch tool, markets now assign only about a 50% chance to a 25-basis-point cut in December, down from nearly 70% a week ago. Federal Reserve Bank of St. Louis President Alberto Musalem stressed the limited room to ease policy without risking excessive accommodation, while Federal Reserve Bank of Minneapolis President Neel Kashkari reiterated that inflation remains too high at around 3%.
Supply-side risks are also providing additional support. The recent decision by the US Department of the Interior to add Silver, along with Copper and metallurgical Coal, to its list of “critical minerals” opens the door to potential Section 232 trade investigations. Similar measures applied to other metals in the past have raised tariff risks and heightened concerns about supply.
Overall, Silver remains on a constructive footing in the short term, backed by a mix of macroeconomic uncertainty, persistent data disruptions and geopolitical concerns related to supply. However, its trajectory will largely depend on how US monetary policy expectations evolve over the coming weeks.
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.