Silver Slips as Geopolitical Risks Ease, Fed Bets Lead

Key Moments

Silver (XAG/USD) trades near $53.70 per troy ounce after an earlier bullish gap as safe-haven flows moderate.
Geopolitical risks linger with potential post-election strikes, Iranian retaliation threats, and ongoing Houthi attacks in Saudi Arabia.
Markets assign a 90.6% probability to a Federal Reserve rate pause in October and a 79.7% chance of a December hike.

Safe-Haven Demand Softens After Trump Comments

Silver prices come under pressure after initially opening with a bullish gap, with XAG/USD hovering around $53.70 per troy ounce during Asian trading. The pullback tracks a decline in safe-haven demand after US President Donald Trump dismissed the prospect of an immediate military strike on Iran.

In an interview with Al Jazeera, Trump said, “There will not be a strike today.” Despite this, market participants remain wary about the potential for renewed military action after this week’s Israeli elections and next week’s US midterm elections. Reports indicate that Iran is prepared to respond by targeting Israel and the UAE should hostilities resume.

Persistent Regional Tensions in the Arabian Peninsula

Geopolitical risk in the broader Middle East remains elevated. In Yemen, the Houthi movement announced on Sunday that it will keep attacking Saudi Arabia’s King Khalid Airport in Riyadh, Reuters reported. The statement came shortly after Saudi authorities said flight operations at the facility had restarted.

Over the weekend, tensions intensified as the Houthis claimed responsibility for strikes on both the airport and Saudi oil infrastructure on Saturday. Saudi officials separately confirmed that they intercepted more incoming missiles and drones on Sunday while working to restore partial operations at the airport.

Energy Prices, Inflation Concerns, and Precious Metals

The ongoing conflict across the Middle East continues to bolster global energy prices, reinforcing inflation concerns and shoring up expectations for higher interest rates. These elevated rate expectations tend to be a drag on non-yielding assets such as Silver and other precious metals, as they offer no coupon or interest to offset tighter policy conditions.

Fed Outlook: Markets Firm on October Pause

Investor attention is now centered on the upcoming Federal Reserve policy meeting. The central bank is widely anticipated to leave interest rates unchanged at its next decision, with markets looking ahead to a possible rate increase in December.

Data from the CME FedWatch Tool show that traders are pricing in a 90.6% likelihood that the Fed will keep rates on hold at the October 27-28 meeting. At the same time, market implied odds point to a 79.7% probability of a rate hike in December.

Event / Metric	Details
Current Silver price (XAG/USD)	Trades around $53.70 per troy ounce during Asian hours
Fed October 27-28 meeting	90.6% implied probability of a rate pause
Fed December outlook	79.7% implied probability of a rate hike

CTA Flows and Precious Metals Technical Pressure

Systematic selling is also weighing on the precious metals complex. Commenting on gold, strategists at TD Securities noted, “CTAs have been heavy sellers of gold, with prices now reaching key support levels,” highlighting the scale of algorithmic and rules-based liquidation that has recently pressured the metal.

Silver as an Investment: Key Characteristics

Silver is a widely traded precious metal that investors use as a store of value and, historically, as a medium of exchange. While it typically attracts less attention than Gold, market participants may allocate to Silver to diversify portfolios, capture its intrinsic value, or seek potential protection during periods of elevated inflation.

Access to Silver exposure can take several forms. Investors may purchase physical Silver in the form of coins or bars, or they may opt for exchange-traded products such as Exchange Traded Funds that mirror Silver’s price performance on global markets.