Silver (XAG/USD) rallied sharply on Wednesday, trading around $52.45 at the time of writing, up 2.00% on the day. The precious metal continued its bullish momentum, supported by the continued decline in US yields and investors shifting to non-interest-bearing assets, amid an increasingly accommodative outlook from the Federal Reserve (Fed).

Market conditions remain driven by continued downward pressure on US interest rates, as Fed expectations turn more dovish. Recent comments from New York Fed President John Williams, emphasizing the need for further monetary adjustments, have reinforced expectations of a rate cut as early as the December meeting.

According to the CME FedWatch tool, the market is now pricing in a very high probability of a 25 basis point rate cut, reinforcing the view that the Fed is moving toward a more accommodative stance, which has historically been a supportive factor for non-yielding silver.

The emergence of White House economic adviser Kevin Hassett as a leading candidate to replace Jerome Powell as Fed Chair further reinforces this dovish perception. Investors believe that a Trump administration-appointed Fed chair could support a faster monetary easing cycle, especially amidst slowing economic momentum.

Silver also benefited from renewed safe-haven inflows, driven by international uncertainty and signs of a weakening US economy. Recent weak data, including slowing consumer spending and moderating producer prices, reinforced the impression that the US economic engine was losing steam. As a result, investors increasingly turned to precious metals as a hedge against macroeconomic risks and market volatility.

At the same time, the broad weakness of the US Dollar (USD), pressured by falling yields and expectations of interest rate cuts, mechanically supported XAG/USD by lowering costs for international buyers.

In this environment, where the Fed appears to be shifting toward additional easing and uncertainty remains high, silver maintained a solid bullish bias. Gold's resilience further bolstered broader market sentiment, favoring precious metals. (alg)

Source: FXstreet