Silver rises near $51.00 amid dovish Fed expectations

• Silver continues its advance, supported by the prospect of further Federal Reserve rate cuts.
• Weak US data maintains safe-haven appeal despite the resolution of the US government shutdown.
• The US Dollar steadies slightly, but remains under pressure from dovish Fed expectations.

Silver (XAG/USD) trades around $51.00 on Tuesday at the time of writing, up 0.90% for the day, extending its three-day winning streak. The metal benefits from growing speculation that the Federal Reserve (Fed) will continue its monetary easing cycle in December. Markets currently price in a more than 60% chance of a new rate cut, according to the CME FedWatch tool, reinforcing investor appetite for non-interest-bearing assets such as Silver.

Expectations of further policy easing follow recent weak economic indicators. The University of Michigan Consumer Sentiment Index dropped to 50.3 in November, its lowest level since mid-2022, while job losses in October and subdued retail activity highlight a slowing economy. These developments support the view that the Fed will prioritize growth stabilization over inflation concerns, a dynamic typically favorable to precious metals.

Meanwhile, the partial resolution of the US government shutdown helps to improve risk sentiment, though underlying concerns about its economic impact persist. The US Senate passed a funding bill by a 60-40 vote, signaling a likely reopening of federal agencies within days. However, the long period of administrative paralysis is expected to delay key data releases, complicating the Fed's assessment of the economy's momentum.

The US Dollar (USD) shows limited reaction, with the US Dollar Index (DXY) hovering near 99.60 as traders await further guidance from upcoming Federal Open Market Committee (FOMC) speeches. Analysts at OCBC note that the absence of fresh data will keep the market focused on Fed communication. ING analysts warn that markets may be underestimating downside risks for the USD into year-end, as a normalization of data releases could expose further signs of weakness in the labor market and US growth. "A resumption of data releases in the US does carry non-negligible downside risks to the dollar", note the analysts.

In this context, Silver remains well supported by a mix of safe-haven demand and dovish monetary expectations, even as improving political clarity limits its upside potential.