Silver boosted by falling yields and weak production
On the economic front, silver has benefited from a significant decline in US Treasury yields. 2 and 10 year yields are currently at 3.95% and 4.03% respectively, after the NY Empire State Manufacturing Index fell 23 points to -11.9 in October.
This is the lowest level in five months, a stark contrast to the growth of 11.5 in September.
The contraction in business activity has pushed investors into non-yielding assets like silver, which becomes more attractive as bond yields fall.
Expectations about Federal Reserve interest rate cuts capped
While silver’s momentum remains strong, expectations of aggressive rate cuts by the Federal Reserve (Fed) in 2024 are muted. Recent robust US employment and inflation data have tempered predictions for drastic monetary easing.
According to the CME FedWatch Tool, there is a 94.1% probability of a 25 basis point cut in November, but no indication of a larger 50 basis point cut.
Atlanta Fed President Raphael Bostic has also indicated he expects only one more rate cut of 25 basis points this year, based on the Fed’s latest projections.