silver prices are showing signs of recovery as safe-haven demand rises amidst escalating tensions in the Russia-Ukraine war. The recent depreciation of the US Dollar could boost the appeal of dollar-denominated silver , as investor sentiment remains optimistic about economic conditions. Despite this potential, the non-yielding nature of silver comes into focus, especially with increasing speculation around the Federal Reserve potentially slowing its rate-cutting cycle. Currently, silver is trading around $30.80 per troy ounce, having retraced some gains, a movement reminiscent of the recent fluctuations observed in the price of gold .
Recent developments have heightened geopolitical risks, particularly following an announcement from Russia regarding a hypersonic missile test directed at the Ukrainian city of Dnipro. This was presented by the Kremlin as a response to Ukraine’s use of US and British-supplied weaponry in their first offensive on Russian soil. Such aggressive actions contribute to market uncertainty, often prompting investors to seek refuge in precious metals like silver .
Moreover, silver prices may gain additional favor due to the anticipated weakening of the US Dollar, particularly after significant political appointments. The nomination of hedge fund manager Scott Bessent as the new Treasury Secretary has led to expectations of a more cautious approach to fiscal policies, which may stave off aggressive trade measures that have previously instilled fear in the markets.
Nevertheless, silver remains sensitive to shifting expectations around interest rates. Recent positive economic indicators, including a strong reading from the S&P Global US Purchasing Managers’ Index, suggest robust economic activity. Consequently, futures markets are recalibrating, now pricing in a 50.9% likelihood of a quarter-point rate cut by the Federal Reserve, a decrease from the previous week’s 61.9%. This evolving landscape presents both challenges and opportunities for silver as it navigates the complexities of global economics and geopolitics.
