While geopolitical risks increase silver’s appeal, traders are also focusing on domestic economic factors in the US
US Dollar Strength and the Fed’s Policy Impact on Silver
The strengthening US dollar has put pressure on silver prices. The dollar’s rise follows a surprise decline in U.S. initial jobless claims, which fell to 213,000 for the week ending Nov. 15, below the previous 219,000 and an expected 220,000. The data indicate a resilient labor market, reducing the need for the Federal Reserve to cut rates.
Federal Reserve officials, including Chairman Jerome Powell, emphasized caution on rate cuts, citing inflation risks. A recent survey shows that while 90% of economists expect a 0.25% rate cut in December, slower adjustments are expected in 2025 due to inflation concerns.
Boston Fed President Susan Collins also emphasized that elevated inflation requires a cautious approach, potentially limiting silver’s upward trend as rate cuts support economic activity but strengthen the dollar, making metals more expensive for foreign buyers.
Geopolitical tensions are supporting safe haven demand for silver
Increasing geopolitical instability continues to support silver as a safe haven. President Putin’s comments about the increased risks in the conflict between Russia and Ukraine, combined with reports of the use of hypersonic missiles, are increasing investor concerns.
Historically, silver has benefited during periods of geopolitical tension, as its safe-haven status attracts investors seeking refuge from market volatility.