Silver prices (XAG/USD) surged to near $31.00 during Tuesday’s European session, buoyed by growing expectations of a Federal Reserve (Fed) interest rate cut, China’s latest monetary stimulus efforts, and escalating geopolitical tensions in the Middle East.
The CME FedWatch tool now indicates a 51% likelihood that the Fed will cut interest rates by 50 basis points (bps) to a range of 4.25%-4.50% in November, up from 29% just a week ago. This shift has weighed on the U.S. dollar, pushing the Dollar Index (DXY), which measures the dollar’s strength against a basket of six major currencies, down to 100.80. Historically, a weaker dollar makes silver more attractive to investors, as it lowers the metal’s relative cost.
Fed rate cut expectations have risen as policymakers express concerns over weakening job growth in the U.S., further bolstering silver’s bullish momentum.
Meanwhile, China’s top regulators have unveiled a series of stimulus measures to support their economy, which is expected to boost silver demand due to the metal’s industrial applications, including in electric vehicles and electronics. Increased demand from China, a major global consumer of silver, is viewed as a key factor behind the metal’s price increase.
Geopolitical tensions in the Middle East, particularly between Israel and Lebanon’s Hezbollah, have also contributed to the surge in silver prices. The region has seen heightened conflict after an Israeli airstrike in southern Lebanon on Monday, intensifying demand for silver as a safe-haven asset.
With a confluence of factors including potential Fed rate cuts, economic stimulus from China, and rising geopolitical risks, silver continues to gain traction, positioning itself as a key safe-haven investment.
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