Silver extends rally as Powell’s Jackson Hole remarks boost Fed cut bets
- Silver extends gains for the third consecutive day, trading around $38.70, up 1.2% on Friday.
- Fed Chair Powell’s Jackson Hole remarks highlighted rising downside risks to jobs and tariff-driven inflation, reinforcing a cautious but flexible monetary policy stance.
- Markets interpret remarks as dovish; CME FedWatch shows 90% cut probability in September, up from 70% earlier in the day.
Silver (XAG/USD) rallies sharply on Friday, rebounding from an intraday low of $37.70 to trade near $38.70, up around 1.40% on the day. The move came as traders repositioned after Federal Reserve (Fed) Chair Jerome Powell struck a cautious but flexible tone in his Jackson Hole address, leaving the door open to monetary policy easing.
Powell acknowledged that the US economy faces a shifting balance of risks, with downside pressures on employment and upside risks to inflation. He noted that job growth has slowed sharply to just 35,000 per month over the past three months, while GDP growth cooled to 1.2% in the first half of the year. At the same time, higher tariffs are now clearly pushing up consumer prices, with core PCE inflation running at 2.9% in July. Powell stressed that while these effects may prove temporary, the Fed will not allow a one-time rise in prices to turn into an ongoing inflation problem.
Markets interpreted the speech as leaning dovish, with rate cut bets strengthening as Powell emphasized a balanced approach to the Fed’s dual mandate. The CME FedWatch Tool now shows a 90% probability of a 25 basis point cut in September, compared with about 70% earlier in the day. The repricing sent the US Dollar broadly lower and boosted demand for precious metals.
Silver extended gains as investors sought a hedge against both slower growth and lingering inflation risks. The metal is holding comfortably above the $38.00 handle, with resistance seen near $38.80-$39.00. A sustained break higher could open the way toward the $39.50–$40.00 zone, while immediate support rests at $37.50.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Author
Vishal Chaturvedi
FXStreet
I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.
