Silver (XAG/USD) strengthened on Wednesday (October 29th), rising 2.50% for the day and trading around $48.25 per ounce at the time of writing. The gray metal benefited from renewed interest in safe-haven assets as investors remained cautious ahead of the Federal Reserve's (Fed) monetary policy announcement, while geopolitical tensions and fiscal uncertainty in the United States (US) maintained a favorable backdrop for precious metals.

Silver's rebound followed Gold's (XAU/USD) rally back above the symbolic $4,000 level, supported by expectations of a dovish Fed stance. Market participants largely anticipate a 25 basis point interest rate cut at the conclusion of the two-day Federal Open Market Committee (FOMC) meeting on Wednesday, with another cut likely in December. The prospect of lower interest rates weighed on the US Dollar (USD) and Treasury yields, increasing the appeal of non-yielding assets such as Gold and Silver.

Meanwhile, signs of progress in US-China trade talks have temporarily eased concerns about an escalation in global trade tensions, but political and fiscal headwinds in Washington continue to drive demand for defensive assets. The prolonged US government shutdown, now entering its fourth week, has raised concerns over delays in the release of economic data, including the Nonfarm Payrolls (NFP) report, which is crucial for assessing the strength of the US economy.

Furthermore, new US sanctions on major Russian energy companies and the cancellation of a planned meeting between US President Donald Trump and Russian President Vladimir Putin have contributed to the fragile geopolitical climate, further supporting demand for safe-haven assets. (alg)

Source: FXstreet