Silver’s volatility after the Fed’s rate cut
Following the Fed’s decision on September 18, silver experienced significant price fluctuations. Initially, prices rose to a new high of $31.20. During his news conference, Fed Chairman Jerome Powell emphasized the need to keep inflation under control, downplaying concerns about a recession while highlighting the strength of the U.S. labor market.
He also indicated that further rate cuts will be assessed on a case-by-case basis.
Despite the Fed’s measured stance, silver prices fell almost 5% to $29.70, while US Treasury yields and the Dollar Index gained strength. However, in the following sessions, silver recovered sharply and climbed back to $31.29. This illustrates the enduring appeal of silver as a hedge against economic instability.
Strong demand from China is driving silver prices
A key factor supporting silver prices is robust demand in China, where prices are almost 10% higher than international rates. This premium is driven by China’s booming solar panel industry and strong import activity.
The People’s Bank of China (PBoC) kept its one-year Loan Prime Rate (LPR) steady at 3.35%, further supporting economic stability and continued demand for silver.
Meanwhile, the Bank of Japan and the Bank of England also maintained their interest rates at 0.15% and 5% respectively, reflecting a global trend of cautious monetary policy.