Silver (XAG/USD) extended its rebound on Wednesday, climbing 2.4% to around $52.40 per troy ounce as renewed geopolitical tensions and growing expectations of further monetary easing by the Federal Reserve (Fed) fueled demand for safe-haven assets. The metal is now trading just below Tuesday’s record high of $53.77.
US-China tensions boost safe-haven appeal
The rally gained momentum after US President Donald Trump warned that Washington could sever select trade ties with Beijing, accusing China of “economic hostility.” The comments reignited fears of a deeper global slowdown, prompting investors to seek refuge in precious metals. The International Monetary Fund (IMF) also cautioned that prolonged tariff uncertainty could further strain global trade and weaken growth prospects.
US shutdown and data void reinforce bullish sentiment
The ongoing US government shutdown, now entering its third week, has intensified market uncertainty, supporting safe-haven inflows into Silver and Gold. With key economic indicators such as the Consumer Price Index (CPI) and Nonfarm Payrolls (NFP) delayed, traders lack critical data to assess the economy’s direction, strengthening the view that the Fed will maintain its dovish stance.
Fed rate cut expectations weigh on USD
Fed Chair Jerome Powell recently admitted that the US labor market has “softened considerably,” citing “significant downside risks” to employment. Markets are now fully pricing in a 25-basis-point (bps) rate cut in October and another in December, according to the CME FedWatch tool. These expectations have driven the US Dollar (USD) lower, further boosting non-yielding assets such as Silver.
Geopolitical risks keep sentiment fragile
Adding to the cautious tone, reports of potential new US military aid to Ukraine and sharp rhetoric from Russia have heightened global uncertainty. In this risk-sensitive environment, Silver continues to serve as both a hedge against geopolitical volatility and a safeguard against potential monetary debasement.
