Silver Corrects Amid Dollar Strengthening Due to Global Political Drama
Silver (XAG/USD) moved cautiously around $48.3 troy ounces in European trading on Tuesday, although it remained near its highest level in more than 14 years, as safe-haven interest remained strong, but the US dollar's occasional push weighed on prices. The backdrop remains risk-off: the ongoing US government shutdown and delayed official data releases have led market participants to rely more on alternative signals while assessing the prospect of a significant Fed interest rate cut this month. Under these conditions, the precious metal's rally remains supported despite occasional USD strengthening.
Global political factors have also heightened demand for hedging. In Europe, the French political crisis escalated after Prime Minister Sébastien Lecornu resigned, fueling fiscal concerns and weighing on eurozone sentiment. In Asia, Sanae Takaichi's victory as LDP leader pressured the yen as markets perceived a delay in the Bank of Japan's normalization measures. This combination increased forex volatility and boosted the appeal of hard assets like gold and silver as portfolio risk diversification.
Looking ahead, market focus will be on the probability of a Fed rate cut (monitored via CME FedWatch) and the duration of the shutdown, as both impact the dollar and Treasury yields—two key determinants of silver's near-term direction. As long as expectations for monetary easing remain high and political uncertainty persists, the underlying bias for silver is likely to be positive, although room for consolidation remains open given the recent sharp rally. Market participants are eyeing the psychological level of $49–$50 per ounce as the next test area.
Source: Newsmaker.id
