At 12:53 GMT, Silver (XAG/USD) is trading $32.81, up $0.36 or +1.10%.
The US presidential race, which is hotly contested between Democratic candidate Kamala Harris and Republican incumbent Donald Trump, is keeping investors cautious across asset classes. Market sentiment around gold – a leading indicator for precious metals – suggests that a Trump victory could boost demand as his economic policies are perceived as inflationary, potentially pushing gold towards $35.40. However, a Harris win could dampen inflation concerns, leading to a more muted reaction in metals markets as her policies are seen as a continuation of the Biden administration’s current economic approach.
Adding to election fears, the Federal Reserve is set to meet on Thursday, with traders anticipating a 0.25% rate cut, which could further impact silver demand. Fed Chair Jerome Powell’s comments will be closely watched to guide future policy direction, especially if weaker economic indicators point to the need for additional cuts. With the US dollar down 0.6% and at a two-week low, the weaker dollar environment is supporting precious metals as dollar-priced assets such as silver and gold become more attractive to international buyers.
The Chinese government is expected to announce new fiscal measures at the end of this week’s meeting of the National People’s Congress, aimed at tackling domestic economic challenges. The size and scope of China’s fiscal response could vary depending on the US election outcome, as analysts believe a Trump victory could lead to a larger package to offset potential tariffs or trade pressure. A larger stimulus package would likely boost industrial demand for silver, as China’s extensive use of the metal in electronics and manufacturing aligns with growth-driven fiscal measures.
The meeting of China’s National People’s Congress is particularly relevant to the silver market, as an increase in stimulus could boost consumption and infrastructure investment, indirectly supporting silver prices. China’s response to US-China trade ties is also expected to determine the stability of the yuan, which could impact global silver trade flows. For example, increased tariffs under the Trump administration would likely lead to China boosting domestic demand, increasing demand for metals in infrastructure projects.
Market Forecast: Bullish Potential for Election and Stimulus Results
As silver remains above the $32.49 support level, the market shows potential for upside depending on the election outcome and Chinese policy announcements. Should Trump secure re-election, his inflationary approach could lift silver alongside gold as a hedge, pushing prices to recent highs. In the event of a larger-than-expected stimulus package from China, industrial demand for silver could increase, providing additional price support.