Silver holds firm on Fed rate cut bets

Silver steadied around $42.5 per ounce on Tuesday, hovering near 14-year highs as investors positioned for an expected US Federal Reserve rate cut this week.

Markets are nearly fully pricing in a 25 basis point reduction on Wednesday, with 67 bps of easing projected by year-end.

Expectations have been bolstered by data showing a cooling labor market and subdued inflation. President Donald Trump also pressed Fed Chair Jerome Powell for a larger cut, citing housing market weakness.

Elsewhere, central banks in Canada and China are expected to ease policy this week, while those in Japan and the UK are likely to hold steady.

On the geopolitical front, US-China trade talks in Spain showed progress, with Trump and Chinese President Xi Jinping scheduled to speak Friday.

Meanwhile, industrial demand from solar, electric vehicles and electronics continues to tighten the physical silver market, with supply constraints supporting prices.