#What has driven spot silver to new highs?
Spot silver recently exceeded $61,000 during Asian trading, marking a continuation of its remarkable rally. This surge follows a clean break above the $60 mark just ahead of the Federal Reserve's interest rate announcement.
Silver's impressive performance this year can be attributed to persistent inflation, tight supply, and an increasing demand from sectors such as electronics, solar energy, and exchange-traded funds (ETFs).
#How does supply and demand affect silver prices?
Over the past decade, mining supply has decreased while demand has surged, resulting in a market that is structurally tight. This imbalance is a crucial driver for rising prices.
#What impact will the Fed's rate cut have on silver?
Expectations surrounding a potential rate cut by the Federal Reserve are also contributing to silver's ascent. Current market predictions indicate an 87.6% chance of a rate cut happening soon, leaving only a slight possibility that rates will remain unchanged. A reduction in rates would likely bolster silver prices even more, as it would compound the existing supply constraints and strong demand from both industrial users and investors.
#How does silver compare to gold and stocks?
At this point in the year, silver is outperforming gold and stock markets. While gold had its strong run from late summer to October, rising approximately 60%, silver's growth story remains compelling. Investors are increasingly recognizing silver's potential amidst economic uncertainties, making it a notable alternative in the investment landscape. Watching these trends will be vital for those considering entry or expansion in precious metals.