Silver nears $32 on China's stimulus and Fed rate cut hopes

Silver prices hovered near $32 per ounce on Tuesday, close to one-month highs, as Chinese policymakers unveiled plans for enhanced economic stimulus, boosting demand prospects in the world’s largest metals market.

Silver nears $32 on China's stimulus and Fed rate cut hopes

The Politburo announced a significant policy shift, pledging a “moderately loose” monetary stance and a “more proactive” fiscal approach for 2025 to reinvigorate the economy. This departed from the cautious rhetoric that has characterized the past decade. This commitment to robust economic support has lifted sentiment across commodity markets, particularly metals, as China remains a critical driver of global demand. Silver also benefited from increased expectations of a Federal Reserve interest rate cut later this month, with the likelihood of a 25-basis point reduction climbing to nearly 90%, compared to 73% a week earlier, as per market data.

Silver gains as focus shifts to U.S. inflation and China's economic plans

Lower rates would reduce the opportunity cost of holding non-yielding assets like silver, enhancing its appeal. Investors now focus on upcoming U.S. inflation data, which could further shape the Fed's policy outlook, alongside China's Central Economic Work Conference, which is expected to reveal detailed economic targets and priorities for 2025.