Silver rises as Fed cut bets strengthen

Silver prices rose 1% to about $38.30 an ounce on Wednesday, advancing for a second consecutive session as softer-than-expected U.S. inflation data reinforced market expectations for a Federal Reserve rate cut in September.

Headline inflation remained steady at 2.7% year-on-year, slightly below the consensus forecast of 2.8%, while core inflation — which strips out food and energy — edged up to 3.1%, marking a six-month high. The data underscored a mixed inflation picture, but traders interpreted the softer headline reading as giving the Fed scope to ease policy without jeopardizing price stability.

Rate futures markets now price in a 94% probability of a quarter-point cut next month, with investors also anticipating another move before year-end.

Lower interest rates generally enhance the appeal of non-yielding assets like silver, particularly when combined with heightened geopolitical uncertainty.

Beyond monetary policy, traders are closely watching diplomatic developments. Attention is turning to the planned U.S.–Russia talks in Alaska on the war in Ukraine, with the White House describing the scheduled meeting between President Donald Trump and President Vladimir Putin as “a listening exercise.”

The cautious language has tempered hopes for any immediate ceasefire breakthrough, keeping geopolitical risk premiums in place across safe-haven assets, including precious metals.

With silver often trading in tandem with gold but also benefiting from its industrial demand profile — particularly in solar panels and electronics — the combination of easing policy expectations and persistent geopolitical tension has added momentum to its recent recovery. Market participants will now be watching both the Fed’s September decision and the outcome of the Alaska talks for further direction.