Silver Slides Toward One-Year Low as US Politics Shift

Key Moments

Silver Under Pressure Near One-Year Lows

Silver prices (XAG/USD) continue to weaken for a second consecutive session, changing hands near $49.20 per troy ounce during Asian trading on Wednesday. The metal is trading close to its one-year trough of $48.62, reached on November 3, as investors react to the outcome of the U.S. midterm elections. The Democrats have secured a majority in the U.S. House of Representatives, ending Republican control and fueling investor uncertainty regarding the path of U.S. fiscal policy.

The shift in congressional power has introduced questions about potential changes in legislative leadership and the direction of government spending and taxation. This political realignment appears to be weighing on sentiment toward silver, contributing to the latest leg lower in prices.

U.S. Midterm Results Reshape Congressional Balance

Voters in the United States cast ballots in midterm elections on Tuesday to decide control of Congress for the remaining two years of President Donald Trump’s term. According to live figures from Decision Desk HQ, results have been declared for 253 of the 435 seats in the House of Representatives. Of those called races, Democrats have won 152 seats and Republicans have taken 101 seats, moving toward the 218 seats required to claim a majority.

The emerging Democratic control of the House is seen as a key driver of renewed political uncertainty, which is feeding into broader market dynamics and sentiment toward risk-sensitive assets, including silver.

Energy Market Moves and Fed Expectations

Declines in oil prices have offered limited support to silver by easing some inflation concerns, helping partially offset the broader downward pressure on the non-yielding metal. Crude prices are holding near a four-week low amid mixed signals regarding negotiations between the United States and Iran.

Both Tehran and Washington are assessing proposals from mediators following reports of U.S. airstrikes on Iran’s Qeshm Island. While softer energy prices could temper expectations for an extended period of restrictive monetary policy, interest-rate markets still indicate a strong likelihood of another tightening step this year. The CME FedWatch Tool shows that traders are pricing in a 78% probability of a Federal Reserve rate hike in December.

Silver Trails Gold as Gold/Silver Ratio Climbs

On a relative basis, silver’s weakness has become increasingly apparent compared with gold. Commerzbank highlights that silver has been “significantly underperforming gold, as reflected in the rise in the gold/silver ratio to 80.” The widening of this ratio underscores the greater magnitude of silver’s decline relative to the yellow metal and reinforces the perception that the recent selloff in silver has been more pronounced.