Spot Silver held in proximity to a 14 1/2-year high of $48.76/oz. on Tuesday, supported by expectations of more Federal Reserve interest rate cuts and in the absence of any signs of a reprieve from an impasse between the two houses of the US Congress that has caused a government shutdown.
Markets are now pricing in about a 92.5% chance of a 25 basis point Fed rate cut in October and an 81.5% chance of another 25 bps cut in December.
Last week, Fed Governor Stephen Miran once again expressed support for an aggressive rate cut trajectory because of the impact of the Trump administration’s economic policies.
On the other hand, Kansas City Federal Reserve Bank President Jeff Schmid indicated he was disinclined to further rate cuts, stating the central bank should remain focused on the danger of too-high inflation.
Additionally, robust industrial demand continued to support Silver prices amid supply constraints. Silver is facing its fifth successive year of a structural market deficit, with output of 844 million ounces well short of demand.
The white metal plays a key role in solar energy, electronics and broader electrification efforts.
Spot Silver was last down 0.18% on the day to trade at $48.44 per troy ounce.
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