As market expectations are that the Federal Reserve will cut interest rates this month, it has boosted investors’ interest in precious metals. The trading price of silver has broken through $40 per ounce for the first time since 2011.
Spot silver rose as much as 1.4% on Monday to $40.2920 an ounce, up more than 40% this year and keeping pace with gold, platinum and palladium. Gold prices rose as much as 0.7% at the start of this week, hitting the highest level since the record set in April.
Against the backdrop of geopolitical tensions and uncertain financial conditions, precious metals have benefited from investors’ strong interest in safe-haven assets – including US President Donald Trump’s frequent attacks on the Federal Reserve, which have raised concerns about the Fed’s independence.
People are increasingly betting that the Federal Reserve will cut interest rates at its next policy meeting this month, and an important US jobs report due on Friday is expected to reinforce this expectation. Lower borrowing costs tend to favor precious metals that do not pay interest.
Silver is also valued for its industrial uses in clean energy technologies such as solar panels. Against this backdrop, the market is set to experience a fifth consecutive year of supply deficit, according to the Silver Institute, an industry group.
Investors have flocked to silver-backed exchange-traded funds (ETFs). In August, silver holdings rose for the seventh consecutive month, marking the longest inflow period since 2020. This has led to a reduction in silver inventories in London, causing the market to remain tight.
A large number of US economic data will be released in the next two weeks, which will be the key to guiding whether market expectations for the Fed to cut interest rates will heat up.
The monthly jobs report to be released on Friday will be the main market catalyst. According to the median of a Bloomberg survey, economists expect about 75,000 new jobs to be added.
In early August, the Bureau of Labor Statistics revised down non-farm payrolls for May and June by nearly 260,000, a figure that drew intense scrutiny. The adjustment prompted strong criticism from President Donald Trump, who fired the agency’s head and accused her of manipulating the data for political purposes.
After that, the Bureau of Labor Statistics will release its expected revision to the Current Employment Statistics establishment survey on September 9, which may lead to further adjustments in the employment growth forecast.
Subsequently, with the release of the consumer price index report on September 11th, the issue of inflation will take center stage.
On September 17, the Federal Reserve will announce its policy decision and quarterly interest rate projections, followed by a press conference by Chair Jerome Powell. Investors will closely watch for any roadmap Powell provides on the interest rate outlook. Swap markets expect a rate cut by the Fed at this meeting with a probability of around 90%.
