Silver (XAG/USD) has remained steady at the start of the week, trading around $58.40 on Monday at the time of writing, up 0.1% on the day. The white metal has extended its consolidation phase, as investors refrain from taking new positions ahead of the Federal Reserve’s policy announcement on Wednesday. This cautious stance keeps XAG/USD range bound within its tight multi-session range.
The market is expecting another cut in the federal funds rate at the final meeting of the year, reducing the target range to 3.50%-3.75%. However, the slowdown in deflation shown by recent price indicators, coupled with more mixed labor-market signals, is leading investors to consider a more measured pace of monetary easing in 2026. This outlook is helping to stabilize the US Dollar (USD) and push Treasury yields higher, which is acting as a headwind for silver in the short term.
Recent US household spending and inflation data, particularly the personal consumption expenditure (PCE) index, the Fed’s favorite gauge, suggest that deflation is losing momentum. Meanwhile, labor-market data has given mixed signals, including weak job creation in the private sector and a decline in jobless claims. These developments have increased uncertainty over the magnitude of upcoming monetary easing, reinforcing a cautious stance across markets including silver.
At the same time, geopolitical risks continue to provide structural support for safe-haven assets. The ongoing Russia-Ukraine tensions and deterioration in Southeast Asian diplomatic relations have driven defensive demand, a trend also reflected in recent gold (XAU/USD) market dynamics.
Against this backdrop, the Fed’s decision is expected to be the major source of volatility for XAG/USD this week. Till then, silver remains strong in a market dominated by caution and a mild recovery in the US Dollar.
Silver FAQ
Silver is a precious metal that is highly traded among investors. Historically it has been used as a store of value and medium of exchange. Although less popular than gold, traders may turn to silver to diversify their investment portfolios, for its intrinsic value, or as a potential hedge during high inflation periods. Investors can purchase physical silver in coins or bars, or trade it through vehicles such as exchange traded funds, which track its price in international markets.
Silver prices may increase due to many factors. Geopolitical instability or fears of a deep recession may cause the price of silver to rise due to its safe-haven status, although to a lesser extent than gold. As a yield free asset, silver tends to rise with low interest rates. Its movement also depends on how the US dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong dollar keeps the price of silver in check, while a weak dollar will likely push prices higher. Other factors such as investment demand, mining supply – silver is much more abundant than gold – and recycling rates can also influence prices.
Silver is widely used in industry, especially in areas such as electronics or solar energy, because it has the highest electrical conductivity of all metals – even higher than copper and gold. An increase in demand can cause prices to rise, while a decline can cause prices to decrease. Dynamics in the US, Chinese and Indian economies can also contribute to price fluctuations: for the US and especially China, their large industrial sectors use silver in a variety of processes; In India, consumer demand for the precious metal for jewelery also plays an important role in determining prices.
Silver prices follow the movement of gold. When gold prices rise, silver usually follows, as they have the same status as a safe-haven asset. The gold/silver ratio, which shows the number of ounces of silver required to equal the value of one ounce of gold, can help determine the relative valuation between the two metals. Some investors may consider a high ratio as an indicator that silver is undervalued, or gold is overvalued. Conversely, a low ratio may indicate that gold is less valuable than silver.
