Silver (XAG/USD) weakened on Tuesday to around $47.70 per ounce, down 1.10% on the day, after attempting to extend its recent rally beyond $49.50. Selling pressure increased as the US dollar (USD) strengthened, supported by expectations of tighter monetary policy from the Federal Reserve (Fed).

The silver metal weakened amid the firmer tone recently adopted by several Fed officials, including Chairman Jerome Powell, who stated that another interest rate cut in December is "not on the cards." The market currently prices a roughly 65% ​​chance of a rate cut at the December meeting, according to the CME FedWatch tool. This cautious stance strengthened the US dollar and limited gains for non-yielding assets like silver.

At the same time, the US economy remains hampered by the ongoing budget impasse in Washington, as the partial government shutdown enters its sixth week. If prolonged, this would be the longest in US history, potentially delaying the release of key indicators such as the Nonfarm Payrolls (NFP) report and adding to macroeconomic uncertainty.

Investors are also keeping an eye on ongoing geopolitical and trade tensions, which are keeping demand for safe-haven assets high. This defensive component helped limit silver's correction, following its recent rally driven by expectations that the Fed could resume monetary easing if economic risks escalate. (alg)

Source: FXstreet