Silver holds steady ahead of US CPI

Silver held around $41 per ounce on Thursday, hovering near 14-year highs, as traders positioned cautiously ahead of the latest US consumer inflation report, which could determine the size of the Federal Reserve’s anticipated rate cut next week.

On Wednesday, producer price data came in softer than expected, showing a 0.1% decline in August after a downwardly revised 0.7% gain in July, missing forecasts for a 0.3% rise.

The figures reinforced the narrative of cooling price pressures, fueling expectations that the Fed is poised to begin easing monetary policy. Markets are fully pricing in a 25 basis point cut, while assigning an 8% probability to a larger half-point move should incoming CPI data show a sharper slowdown.

Safe-haven demand also provided an additional boost. Investors sought shelter after President Donald Trump urged the European Union to impose tariffs of up to 100% on China and India in order to intensify pressure on Russia, raising fears of heightened global trade tensions.

The geopolitical backdrop has amplified silver’s dual role as both a monetary hedge and a crisis asset, complementing the support from easing policy expectations.

On the industrial side, silver continues to benefit from robust structural demand. Resilient growth in solar installations, electric vehicle production, and electronics manufacturing has kept the physical market tight. Supply constraints, including limited mine output growth and reduced recycling flows, have added to the squeeze, creating a backdrop of persistent deficits.

Analysts highlight that these fundamentals differentiate silver from gold, as the white metal’s industrial applications provide a secondary demand pillar that cushions it against pure macro-driven selling pressure.

With prices consolidating near multi-year highs, traders are awaiting the inflation data release for confirmation of whether silver can extend its rally. A softer print could heighten the odds of a more aggressive Fed cut, potentially fueling fresh upside, while a surprise rebound in CPI could stall momentum and reinforce the dollar’s strength.