Insights 
VT 
The price of silver remains around $48.90, close to its recent peak of $49.55. Its demand as a safe haven reduced due to alleviated geopolitical risks following an initial peace agreement between Israel and Hamas.
The Federal Open Market Committee suggests a potential for further interest rate cuts this year. Currently, markets predict a 92.5% likelihood of a rate reduction in October and a 78% possibility of another in December.
The ongoing US government shutdown, lasting for nine days, has caused a halt in economic data release and may lead to public-sector job losses. Meanwhile, private reports indicate declining ADP payrolls and ISM PMI job indices, affecting economic stability.
Silver is a less popular but still valuable investment asset. It is used as a store of value, particularly during inflation. It can be influenced by geopolitical instability, interest rates, and fluctuations in the US Dollar’s value.
Its industrial demand in electronics and renewable energy also impacts silver prices. Silver prices often correlate with gold, with variations in the gold/silver ratio affecting perceptions of their relative values.
With silver pulling back from its recent all-time high of $49.55, we see a potential entry point for bullish positions. The slight easing in safe-haven demand, prompted by news of a potential peace plan, appears to be a temporary distraction from more significant market drivers. This dip could present an opportunity before the market fully prices in other bullish factors.
The Federal Reserve’s dovish stance remains the most powerful catalyst for higher silver prices. The latest meeting minutes strongly signal further rate cuts, with markets now pricing in a 92.5% chance of a cut this month. As interest rates fall, the appeal of holding non-yielding silver increases significantly, a pattern we also observed during the rate-cutting cycle of 2019 which preceded a major rally.
Adding to this, the ongoing US government shutdown, now in its ninth day, is creating domestic uncertainty and weighing on the US Dollar. Historically, such events have been positive for precious metals; during the 35-day shutdown in 2018-2019, silver prices gained over 8% as the dollar weakened. We expect this ongoing stalemate to provide a consistent tailwind for silver in the coming weeks.
We must also consider the robust industrial demand which provides a solid floor for silver prices. Recent reports from the Silver Institute show global industrial consumption is on track to rise by 12% in 2025, driven by record solar panel installations and the expansion of 5G technology. This strong underlying demand helps insulate the price from short-term shifts in investor sentiment.
Finally, looking at the Gold/Silver ratio gives us another reason for optimism. With gold trading near $4,000 and silver near $49, the ratio stands at approximately 81, which is well above the 21st-century average of around 65. This suggests that silver is currently undervalued relative to gold and has significant room to catch up.
