Silver price advances slightly as markets anticipate Fed rate cut
Silver (XAG/USD) stabilises around $58.60 on Tuesday, up 0.85% on the day, as investors hold their breath ahead of the Federal Reserve’s (Fed) monetary policy decision due on Wednesday. The white metal remains stuck in a consolidation phase, a typical behavior when markets anticipate a decisive signal on US interest rates.
Market consensus remains strongly tilted toward a 25-basis-point rate cut, a scenario almost fully priced in according to the CME FedWatch tool. Expectations of additional monetary easing are boosting demand for Silver, a non-yielding asset particularly sensitive to real interest-rate movements.
These dovish expectations have been reinforced by the gradual deterioration of the US labor market. Several recent indicators, including weaker hiring momentum and signs of softer labor demand highlighted by Fed officials, have strengthened the case for additional easing. John Williams, President of the Federal Reserve Bank of New York, noted in late November that economic growth had slowed and that labor-market conditions were cooling, adding that further adjustment was likely needed. His cautious tone helped fuel market bets on a more accommodative stance in the near term.
In this environment, the broader sense of caution in financial markets also supports precious metals. Silver benefits from hedging flows in an environment where economic signals are becoming more mixed and investors prepare for a possible revision of the interest-rate outlook for 2026.
Wednesday’s meeting will be decisive. If the Fed confirms a rate cut accompanied by a cautious message, Silver may remain supported or even extend its advance. Conversely, a firmer tone on the future path of interest rates, a “hawkish cut”, could limit the metal’s short-term upside potential.
Source: FXstreet.com
