Silver holds near 14-year peak

Silver traded above $42 per ounce on Monday, hovering near 14-year highs as investors positioned ahead of a closely watched US Federal Reserve decision this week.

Markets have assigned a roughly 96% probability to a 25 basis point rate cut on Wednesday, while a small 4% chance remains for a bolder half-point move. The expectations come on the heels of recent US data showing signs of labor market cooling and subdued inflation, both of which reinforced the case for policy easing.

The monetary backdrop extends beyond the Fed. Central banks in Canada and China are also expected to ease policy this week, while the Bank of Japan and Bank of England are anticipated to stand pat, highlighting diverging global approaches to balancing growth and inflation risks.

Investors see this synchronized easing cycle as broadly supportive for precious metals, which tend to benefit from lower interest rates and weaker currencies.

On the geopolitical front, US and Chinese officials began talks in Madrid on Sunday covering national security, trade, and economic issues. While no breakthroughs are expected in the short term, even the resumption of dialogue has eased some concerns about worsening tensions.

At the same time, heightened risks elsewhere—including ongoing conflict in Ukraine and instability in the Middle East—have reinforced silver’s appeal as a safe-haven asset.

Industrial fundamentals also continue to provide a firm underpinning. Demand from solar panel manufacturing, electric vehicles, and electronics has kept the physical silver market tight.

Supply constraints, particularly in mining and refining, have further amplified the imbalance, leaving inventories low relative to demand. This dual role of silver—both as a precious and an industrial metal—has set it apart from gold in recent sessions, helping it maintain gains even amid broader market volatility.

Looking ahead, the Fed’s decision and accompanying guidance will be pivotal. A clear dovish signal could drive silver to fresh multi-year highs, while any attempt to temper market expectations might spark some short-term consolidation. Nevertheless, with industrial demand strong and geopolitical risks lingering, analysts see the medium-term outlook for silver as firmly constructive.