Market data indicate that traders are now pricing in a 95% probability of a 25-basis-point rate cut in October, with another move likely in December, according to the CME’s FedWatch Tool. Lower yields tend to enhance the appeal of non-interest-bearing assets such as gold and silver.
“The shift in rate expectations is the key driver behind the metals’ strength,” said a senior commodities strategist at JP Morgan.
Meanwhile, the U.S. government shutdown has raised fresh concerns about fiscal stability and potential delays in the release of economic data. Investors are turning to precious metals as a hedge against policy uncertainty and a possible slowdown in consumer and business spending.
Broader Macro Drivers Strengthen Safe-Haven Flows
Outside the U.S., policy shifts and geopolitical tensions have also buoyed safe-haven demand. Japan’s election of fiscal dove Sanae Takaichi as the ruling party’s new leader signals a likely delay in the Bank of Japan’s rate normalization, weakening the yen and adding support to gold.
In Europe, slowing manufacturing data and persistent inflation have reinforced investor appetite for assets viewed as reliable stores of value.
Silver, often seen as both an industrial and monetary metal, is benefiting from dual support—rising safe-haven demand and expectations for stronger industrial use in solar technology and electronics.