Silver Holds Near Its Highest Level Since 2011 Amid Fed Policy Uncertainty

See - Sada Elbalad

3 days ago

Waleed Farouk
Amid a cautiously optimistic global market environment, silver prices remained steady on Wednesday, hovering near their recent highs. The market's performance was shaped by overlapping macroeconomic signals and continued volatility surrounding U.S. monetary policy.
In the local Egyptian market, a report issued by the Safe Haven Research Center indicated that silver prices were stable, with 800-purity silver priced at EGP 52 per gram, and 925-purity silver at EGP 60 per gram. A silver pound coin (925 purity) stood at approximately EGP 480.
Globally, the price of silver settled at $37.80 per ounce, showing little movement from the previous session's close at $37.82, as traders adopted a cautious stance in relatively quiet trading.
Conflicting U.S. Data Moves the Market
Silver traded within a narrow range during today's session. It started slightly lower due to a modest uptick in U.S. Treasury yields but quickly rebounded, bolstered by renewed expectations of an interest rate cut and a weakening dollar index.
Since the beginning of the year, silver has surged more than 30%, reaching levels not seen since 2011. Meanwhile, the gold-to-silver ratio dropped to around 89, highlighting silver's relative outperformance compared to gold.
This strong performance stems from a complex mix of economic factors, most notably growing market expectations that the Federal Reserve will cut interest rates in September. Market pricing currently assigns an 87% probability to such a move, following a string of disappointing U.S. data—particularly weaker job growth and a slowdown in the services sector.
Dollar Weakness vs. Rising Yields
Silver's appeal was further supported this week by a drop in the U.S. dollar to a seven-day low, making the dollar-denominated metal more attractive to foreign investors. However, a modest recovery in U.S. Treasury yields curbed the metal's upward momentum, prompting some profit-taking, especially amid political uncertainty over upcoming appointments at the Fed.
Investors are closely watching the White House, as President Donald Trump is expected to announce his picks for open seats on the Federal Reserve's board, as well as his choice for the next Fed Chair. These developments add to market jitters, particularly in light of Trump's repeated criticism of the Fed's current hawkish policy stance.
Industrial Demand Remains a Key Driver
On the supply and demand front, silver continues to benefit from robust industrial demand, especially in electronics and solar energy. Solar panels alone account for roughly 15% of global silver consumption. Analysts note that the silver market has faced a supply deficit for five consecutive years, reinforcing price support.
Market signals reinforce this trend: borrowing costs for silver in the London market have exceeded 6%, indicating tight short-term supply. In addition, exchange-traded funds (ETFs) have hoarded large quantities of silver, reducing liquidity and creating what some analysts call an "artificial scarcity" that supports higher prices.
Still, recent data from Australia's Perth Mint revealed a drop in silver coin sales to their lowest level in six months—about 452,000 ounces—which may signal a slowdown in retail demand at current price levels. However, global demand momentum remains broadly intact.
Outlook: Silver Poised to Outshine Gold?
Market analysts believe silver may continue to outperform gold in the coming phase, particularly as the gold-to-silver ratio remains above its long-term average. This suggests further room for upside, especially if economic sentiment improves.
Technically, silver faces a key resistance level near $37.90 per ounce. A decisive break above this threshold could pave the way for a fresh rally toward $40, with a potential next target around $42, according to Safe Haven Research analysts.
Markets Await Signals, Liquidity to Dictate Trajectory
Overall, the global silver market is delicately balanced between supportive factors—such as a weaker dollar and dovish monetary expectations—and opposing pressures from rising yields and signs of softening demand.
As investors continue to view silver as both a safe-haven asset and a strategic industrial metal, its price trajectory remains tightly linked to upcoming decisions by the U.S. Federal Reserve and broader macroeconomic developments. The coming weeks may prove critical in determining the metal's direction in global markets.
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