'Flight to Safety' Lifts Silver
Silver strengthened above $48.5 a troy ounce at the start of the week on Monday, as demand for safe-haven assets increased amid the US government shutdown and global economic uncertainty. The "flight to safety" narrative remained dominant after the prospect of a Fed interest rate cut strengthened again, causing US bond yields to decline and increasing the appeal of non-interest-bearing precious metals. Thinner liquidity due to the Golden Week holiday in China also widened the range of movement, making silver's rally feel more volatile than the previous week.
On the other hand, a strengthening US dollar occasionally restrained silver's gains, given that this commodity is priced in USD. However, inflows into silver-based instruments and positive sentiment from industrial demand—particularly from the renewable energy and electronics sectors—provided a cushion as the dollar strengthened. The lack of "hard" data catalysts due to potential delays in the release of US government statistics also encouraged the market to rely on alternative indicators and comments from central bank officials to chart the direction of interest rates.
Looking ahead, market players will focus on developments in Washington's budget policy, speeches by Fed officials, and the release of private sector data that could signal inflation and service/manufacturing activity. If Treasury yields soften and the dollar loses momentum, silver's upside potential remains open. Conversely, a sharp rebound in the dollar or easing macroeconomic concerns could potentially limit the rally in the short term.
Source: Newsmaker.id
