Silver Nears Two-Week High on Safe-Haven Demand

Silver fell below $54 an ounce on Wednesday after rising for two straight sessions, as investors cautiously awaited the US Federal Reserve’s upcoming policy decision and assessed Israeli election results for potential implications on the Middle East conflict. The Fed is widely expected to keep interest rates unchanged, although traders will look for clues regarding a possible rate hike in December. Meanwhile, the Reserve Bank of New Zealand kept its policy rate steady despite market expectations for another increase, signaling a cautious stance toward further monetary tightening. On the geopolitical front, oil prices remained volatile amid a closely contested Israeli election that could influence the course of the Middle East conflict, while markets grappled with the prospect of fresh US strikes on Iran. Silver has faced sustained pressure this year as regional tensions fueled inflation concerns and strengthened expectations for higher interest rates.

Silver prices recovered from early losses to trade around $54.5 an ounce on Tuesday, rebounding from 11-month lows as declining oil prices eased inflation concerns ahead of the US Federal Reserve’s policy meeting. However, gains remained limited by a stronger US dollar and elevated Treasury yields. Oil prices retreated from recent highs amid hopes of de-escalation in the Middle East conflict, helping ease concerns over persistent inflationary pressures. Although the Fed is widely expected to keep interest rates unchanged this week, investors anticipate that the pause may be short-lived, as inflation remains above the central bank’s target and energy prices remain elevated. According to the CME FedWatch Tool, traders are pricing in an 80% probability of a US rate hike in December. Meanwhile, other major central banks are also due to announce policy decisions this week, with both the European Central Bank and the Bank of Japan widely expected to leave interest rates unchanged.

Silver fell below $53 an ounce on Tuesday, hitting near one-year lows as the dollar strengthened ahead of key central bank policy decisions this week, weighing on the precious metal. Renewed investor enthusiasm for the AI trade following Anthropic’s IPO filing also bolstered the dollar, reflecting the sector’s contribution to US economic growth. Meanwhile, oil prices declined for a second consecutive session amid diplomatic efforts to ease tensions in the Middle East, although prices remained elevated, keeping inflation concerns in focus and reinforcing expectations of further monetary tightening. The US Federal Reserve is widely expected to hold interest rates steady this week, with investors closely monitoring policymakers’ forward guidance for indications of a possible rate hike in December. Market participants will also scrutinize upcoming US GDP and PCE price index data for further clues about the economic outlook and the Fed’s future policy direction.