Silver (XAG/USD) extended its decline for a third consecutive session, trading near $41.30 during Thursday’s Asian session. The metal, which does not generate yield, faced renewed pressure as a resilient inflation outlook dampened expectations for deeper Federal Reserve (Fed) rate cuts. According to the Federal Open Market Committee’s (FOMC) latest projections, policymakers expect inflation to close the year at around 3%, still well above the Fed’s 2% target.
Fed eases policy but maintains cautious outlook
The Fed delivered a 25-basis-point rate cut on Wednesday and signaled an additional 50 bps of easing by year-end, a modest increase from June’s projections. Meanwhile, the Bank of Canada (BoC) also lowered its policy rate by 25 bps, while the Bank of England (BoE) and Bank of Japan (BoJ) are widely expected to hold steady this week.
Fed Chair Jerome Powell cited emerging signs of labor market weakness as a key factor behind the decision to begin trimming rates after holding policy unchanged since December, despite concerns that tariffs could keep inflation elevated.
Industrial demand could support silver
While monetary policy dynamics weigh on silver, downside risks may be limited by robust industrial demand. The metal plays a critical role in solar energy, electric vehicles, and electronics manufacturing, while global supply remains constrained.
India’s silver imports are also expected to rise in the coming months, driven by both investment flows and industrial needs. According to industry officials cited by Reuters, the country’s demand has already absorbed last year’s surplus supply, creating a firmer outlook for imports ahead.
