Silver (XAG/USD) continues its upward momentum for the second consecutive day, currently trading at approximately $31.10 per troy ounce on Friday. This rise is largely supported by the recent 50 basis point rate cut implemented by the US Federal Reserve on Wednesday.
The market is increasingly pricing in expectations for additional rate cuts by the Fed through the end of 2024, further enhancing Silver’s appeal. The latest dot plot projections reveal a revised median rate for 2024, dropping from 5.125% in June to 4.375%, indicating a shift towards a more accommodating monetary policy.
As a non-yielding asset, Silver gains attractiveness in a low-interest-rate environment, where the opportunity cost of holding the metal diminishes. This dynamic positions Silver as a potentially more lucrative investment compared to interest-bearing assets.
In the broader context, the People’s Bank of China (PBoC) has opted to maintain its one-year Loan Prime Rate (LPR) at 3.35%, while the Bank of Japan (BoJ) has kept its interest rate steady at 0.15%. Additionally, the Bank of England (BoE) chose to hold its rate at 5%, in line with market expectations.
Safe-haven demand for Silver has been further amplified by escalating tensions in the Middle East. Israeli airstrikes on southern Lebanon marked one of the most significant escalations in the ongoing conflict, prompting the White House to emphasize the urgency of achieving a diplomatic resolution. Meanwhile, Britain has called for an immediate ceasefire between Israel and Hezbollah, according to reports from Reuters.
