The silver move closely follows gold, which recently hit a record high of $2,758.53, driven by demand for safe havens amid ongoing conflicts in the Middle East and Ukraine. However, both precious metals face headwinds from a strengthening dollar and rising government bond yields. The dollar index is heading for its strongest monthly performance since April 2022, making silver less attractive to international buyers. Meanwhile, 10-year government bond yields have risen to a three-month high of 4.26%.
Economic Crystal Ball: Fed Watching and Market Statistics
The market’s attention is now focused on upcoming US economic data that could influence the Federal Reserve’s policy decisions. Key releases include ADP employment figures on Wednesday, personal consumption expenditure (PCE) data on Thursday and Friday’s payroll report. These indicators will be key in shaping interest rate expectations, with traders currently betting on a 95% probability of a 25 basis point cut in November.
East meets West: changing demand patterns
Physical demand patterns are shifting, with Chinese gold consumption falling 11.2% year-on-year in the first three quarters of 2024, as high prices dampened jewelery demand. Market observers are seeing a significant shift in demand for precious metals from east to west, potentially impacting both the gold and silver markets.
Silver’s Perfect Storm: Navigating Future Currents
Looking ahead, several factors can influence silver prices: monetary policy expectations, with lower interest rates generally supporting precious metals; economic data pointing to recession risks could boost demand for safe havens; and geopolitical developments that may impact risk premia. The interplay between these factors, combined with dollar strength and interest rate movements, will likely determine silver’s trend in the coming months.