Spot Silver traded within striking distance of a 14-year peak of $42.97/oz. on Friday following a measured interest rate cut by the Federal Reserve and as the central bank signaled a gradual easing path by year-end.
The Fed lowered its federal funds rate target range by 25 basis points to 4.00%-4.25% at its September meeting and indicated another 50 basis points of rate cuts by the end of the year.
Fed Chair Jerome Powell described the September policy action as a risk-management cut addressing the weakening labor market. Powell also noted the central bank was in a “meeting-by-meeting situation” in regard to the rate outlook.
Markets are now pricing in about a 92% chance of another 25 basis point Fed rate cut in October.
Lower interest rates tend to reduce the opportunity cost of holding Silver, which pays no interest.
Additionally, robust industrial demand continued to support Silver prices amid supply constraints. Silver is facing its fifth successive year of a structural market deficit, according to the Silver Institute industry association.
Spot Silver was last up 0.79% on the day to trade at $42.15 per troy ounce.
Meanwhile, Silver futures for December delivery were last up 0.58% to trade at $42.362 per troy ounce.
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