Spot Silver Trades Near All-Time Highs As Rate Cut Expectations Rise

• Spot prices climb to $54.30 per ounce, just shy of the all-time high of about $54.50.
• At current levels, the precious metal is on track for its biggest weekly gain since the week ending May 30.
• China’s silver inventories dropped to their lowest level in a decade, hinting at a possible supply crunch, ING noted.

Spot silver (XAG/USD) is heading for its fifth straight session of gains, with prices climbing to around $54.30 per ounce on Friday, just shy of the record high of about $54.50 reached on October 17.

At current levels, the precious metal is on track for its biggest weekly gain since the week ending May 30.

While there have been two separate pullbacks over the past month, spot prices continue to remain above the 50-day moving average (50-DMA).

On Friday, trading was affected after a technical outage at CME Group, the world’s largest derivatives exchange, led to a halt in trading across all markets. The problem was caused by a cooling issue at a CyrusOne data centre in the Chicago area.

Rate Cut Hopes

Recent remarks from key policymakers, including Fed Governor Christopher Waller and New York Fed President John Williams, combined with softer U.S. economic data following the government shutdown, have strengthened market expectations for an interest rate cut next month.

According to data from the CME FedWatch tool, there is an 83.4% probability of a 25-basis-point rate cut at the December 10 meeting. A week back, the figure stood at 71%.

Historically, investors tend to rush to safe havens like gold and silver during economic and political uncertainties. Softer monetary policy expectations often support precious metals by reducing borrowing costs and putting downward pressure on the dollar.

Overall, silver has outperformed gold over the last six months, with spot gold’s 27% increase less than half of spot silver’s 63% gains.

Supply Concerns

In a note on Thursday, ING analysts Warren Patterson and Ewa Manthey noted China’s silver inventories dropped to their lowest level in a decade, raising fresh concerns about tight supply in the global market.

At the same time, the Shanghai market has moved into backwardation, meaning near-term silver prices are now higher than later-dated contracts, a sign that physical silver is in short supply in the Chinese market.

How Did Stocktwits Users React?

Retail sentiment for iShares Silver Trust (SLV) on Stocktwits turned ‘bullish’ from ‘neutral’ a day earlier, accompanied by ‘high’ message volumes. 

SLV traded up 1.05% in premarket, and year-to-date, it has gained over 81%.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Share

·

Add us on