Spot Silver surged to a record high of $49.69/oz. on Thursday, tracking Gold’s rally and supported by expectations of more Federal Reserve interest rate cuts this year as well as by robust investor demand and a supply deficit.
The minutes of the FOMC’s September meeting showed that policy makers agreed risks to the US job market were sufficiently high to warrant a rate cut.
Yet, a majority emphasized the risks to the inflation outlook were still tilted to the upside.
Markets are now pricing in about a 92.5% chance of a 25 basis point Fed rate cut in October and an 80% chance of another 25 bps cut in December.
Meanwhile, the ongoing US government shutdown has delayed the release of essential macro data, which complicated assessments of the US economy’s state, as investors had to rely on secondary, non-government data prints.
Also, 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 interesting aspect about the silver market is that the net long positions are only modestly higher so this is not a rally based upon speculative interest. It’s got some pretty solid fundamentals attached to this move in the silver price,” independent analyst Ross Norman was quoted as saying by Reuters.
Spot Silver was last up 1.63% on the day to trade at $49.68 per troy ounce.
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