Silver (XAG/USD) held firm near $51.90 during early Asian trading on Wednesday, after retreating slightly from a historic all-time high. Despite signs of easing from a recent London supply squeeze, the white metal remains supported by heightened safe-haven demand and expectations of further US Federal Reserve (Fed) rate cuts.
Supply dynamics and recent London squeeze
Silver’s gains in the previous session were fueled by concerns over dwindling silver inventories in London, which pushed prices to a premium relative to New York. Traders moved metals across the Atlantic to capitalize on the arbitrage opportunity.
While the historic London squeeze has begun to ease, limiting further short-term gains, underlying demand continues to support the market.
US-China trade tensions bolster safe-haven flows
Escalating trade tensions between the United States and China are providing additional support to silver. US Trade Representative Jamieson Greer indicated that President Donald Trump could impose 100% tariffs on Chinese goods as early as November 1, depending on Beijing’s next actions in the rare earth dispute. Heightened geopolitical risks are driving investors toward safe-haven assets, benefiting XAG/USD.
Fed rate cut expectations support silver
Expectations of further Fed rate cuts are also underpinning the white metal. Fed Chair Jerome Powell signaled that the central bank remains on track for another 25-basis-point rate reduction later this month, citing weakness in the US labor market. Lower interest rates reduce the opportunity cost of holding non-yielding assets such as silver, providing additional support for the precious metal.
