Silver (XAG/USD) climbed to around $49.70 during Friday’s Asian session, holding firm after reaching a four-decade high. The white metal benefits from safe-haven demand, strong industrial interest, and expectations of a US Federal Reserve (Fed) rate cut.
Safe-haven flows support silver
The ongoing US government shutdown, now in its tenth day since October 1, combined with economic concerns over tariffs and geopolitical risks, has boosted demand for silver as a defensive asset. Michael DiRienzo, CEO of the Silver Institute, commented, “There’s just a lot of concern about the global economy, and when that happens, people turn to hard assets like silver.”
Fed rate cut expectations provide additional upside
Traders are pricing in nearly 95% odds of a 25-basis-point Fed rate cut in October, with the probability of an additional reduction in December easing to 82%, down from 90% last week, according to the CME FedWatch Tool. Lower interest rates reduce the opportunity cost of holding non-yielding assets like silver, supporting its upside potential.
Market watchers eye US data and Fed commentary
Investors will monitor the preliminary University of Michigan Consumer Sentiment report later on Friday, along with speeches from Fed officials Austan Goolsbee and Alberto Musalem. A stronger-than-expected reading could lift the US Dollar (USD), potentially weighing on silver prices, while dovish signals from Fed speakers could reinforce the metal’s rally.
