Meanwhile, the Middle East has seen some stabilization, with the ceasefire between Israel and Hezbollah remaining stable. This ceasefire, made possible by diplomatic efforts by the US and France, has allowed residents to return to their homes.
However, Israel’s continued military operations in Gaza remain a major geopolitical risk, contributing to volatility in global markets and affecting commodity prices such as silver.
Dollar weakness and Fed speculation are driving silver demand
The weakening of the US dollar is another major factor behind silver’s rise. Because silver is priced in dollars, a weaker dollar makes it more affordable to international buyers, increasing demand. In addition, the US bond market gained ground after President-elect Donald Trump nominated Wall Street veteran Scott Bessent as Treasury Secretary, boosting investor confidence.
Economic data also plays a crucial role in market sentiment. October core US personal consumption expenditure (PCE) prices met expectations, fueling speculation about a Federal Reserve rate cut in December.
According to the CME FedWatch Tool, there is now a 66.5% chance of a 25 basis point cut, up from 55.9% the week before. However, stronger-than-expected economic performance has tempered these expectations, leaving the Fed’s future trajectory uncertain.
Outlook for silver prices
Silver continues to benefit from its safe haven status amid global instability. The combination of geopolitical tensions, dollar weakness and cautious optimism about Fed policy positions silver for further gains, although any shift in economic or political developments could quickly change its trajectory.