Silver maintains 3-week high
Precious metals markets on Wednesday saw a shining performance for silver, as it rose for the seventh day in a row, climbing to $51.75 per ounce, the highest level in three weeks, outperforming gold in a strong bullish wave.
Bullish catalysts - labor market and economic concerns
A combination of economic factors, most notably signs of a weakening U.S. labor market, have fueled analysts' expectations that interest rate cuts from the Federal Reserve are on the horizon.
The ADP data confirmed these expectations, showing that U.S. private employers lost an average of 11,250 jobs per week in the four weeks ending October 25, painting a bleak picture in the absence of official data.
Interest Rate Cut Expectations
In a direct reaction, market expectations for a December rate cut rose to 68%, up from 62% the day before. This was further supported by comments from Federal Reserve Governor Stephen Merran, who at the beginning of the week called for a further half percentage point rate cut, citing low inflation and high unemployment.
Government Shutdown - Crisis Tunnel Looms on the Horizon
In addition to these factors, there is growing optimism that the long-running, Republican-controlled government shutdown may be coming to an end.
This development has dual implications for silver markets:
- The reopening of the government means the resumption of stalled industrial projects, many of which rely on silver as a key production input.
- The reopening could lead to the release of delayed economic data showing a further slowdown in the economy, boosting demand for both silver and gold as safe havens in times of uncertainty.
A promising future amidst uncertainty
The prospects look positive for silver in the coming period, as fundamentals and technical support combine to support its upward trajectory.
While the economic outlook remains cloudy and fears of recession persist, silver stands out as an attractive investment option, combining the luster of precious metals with the benefits of industrial assets.
