Silver Rises on Thursday

Silver rose nearly 2% to $56.50 an ounce on Thursday, tracking gains across precious metals as a broader flight to safety amid a global equity sell-off and tech rout supported demand for safe-haven assets. Concerns over the sustainability of AI spending in a high-interest-rate environment, a weaker US dollar, and geopolitical tensions in the Middle East and Ukraine also shaped market sentiment. Meanwhile, US producer price data added to signs of mounting inflationary pressures, echoing the CPI report released on Wednesday. Persistent inflation has reinforced expectations that the Fed will keep interest rates elevated for longer, potentially weighing on non-yielding precious metals.

Silver steadied above $56 per ounce on Thursday after a sharp fall in the previous session, as crude oil ended its five-day rally, easing pressure across other markets. A softer dollar and retreating bond yields also provided support to metals. However, expectations of more aggressive Federal Reserve rate hikes continued to weigh on sentiment following hotter-than-expected US inflation data. The US Consumer Price Index rose to 3.7% in September, its highest level in four months and above market forecasts of 3.6%, largely driven by rising energy costs. Federal Reserve Bank of Chicago President Austan Goolsbee described the figures as “discouraging” and cautioned that the rapid expansion of artificial intelligence infrastructure could also be overheating the economy. Meanwhile, San Francisco Fed President Mary Daly indicated that the central bank may need to raise short-term interest rates further, although she saw no immediate need for a rate hike at this month’s meeting.

Silver prices fell below $58 an ounce on Wednesday, hitting their lowest level since early August, as stronger-than-expected US inflation prompted investors to reassess the Federal Reserve’s interest-rate outlook. US inflation climbed to 3.7% year-on-year in September, above forecasts of 3.6%, driven by higher energy prices. Monthly CPI rose 0.6%, its largest increase in five months, while core inflation also exceeded expectations, reaching 2.6% annually and 0.3% monthly. According to LSEG data, markets now see around a 50% chance of the Fed holding rates steady in October, down from over 78% before the report. Meanwhile, the probability of a rate hike in December has risen to nearly 99%, from 88% previously. Although recent Fed communications had offered little indication of consecutive rate hikes, the stronger-than-expected core CPI reading has brought an October move back into consideration, weighing on non-yielding precious metals such as silver.