Silver supported by Fed rate-cut expectations, US economic concerns

• Silver continues to rise, supported by expectations of further Federal Reserve rate cuts.
• Weak US data and lingering uncertainty about the economic outlook sustain safe-haven demand.
• The US Dollar steadies slightly as markets await FOMC speeches after the government shutdown resolution.

Silver (XAG/USD) trades around $51.70 on Wednesday at the time of writing, up 1.00% on the day, extending its recent winning streak. The grey metal benefits from growing speculation that the Federal Reserve (Fed) will cut interest rates again in December. According to the CME FedWatch tool, markets now price in nearly a 68% chance of a 25-basis-point reduction, up from around 62% a day earlier, reinforcing investor appetite for non-yielding assets such as Silver.

The expectations of additional monetary easing follow a string of weak economic indicators in the United States (US). The University of Michigan Consumer Sentiment Index dropped to its lowest level since 2022, while October's job losses and subdued retail activity suggest slowing growth. These signs support the view that the Fed will focus on stabilizing economic momentum rather than containing inflation, a backdrop that typically favors precious metals.

The resolution of the partial US government shutdown has helped improve market sentiment, although concerns remain about its economic cost. The US Senate passed a funding bill earlier this week, and the House of Representatives is expected to approve it soon, paving the way for a reopening of federal agencies. However, the long delay in data publication is likely to complicate the Fed's short-term policy assessment.

The US Dollar (USD) remains under pressure, with the US Dollar Index (DXY) hovering around 99.60 ahead of several speeches by Federal Open Market Committee (FOMC) members later in the day. Analysts at OCBC note that the lack of fresh data will keep markets focused on Fed communication, while ING warns that renewed data flow could reveal further weakness in US employment and growth, posing downside risks for the Greenback. The weakness of the US Dollar makes USD-denominated precious metals more attractive to international investors, thereby supporting Silver prices.

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