- Silver prices rose 0.71% to $33.90 on European markets on Tuesday.
- Rising concerns over rising tensions in the Middle East and uncertainty surrounding the US presidential election are likely to support the white metal.
- A bet that the Federal Reserve will make a small rate cut could limit the fund’s upside.
The currency (XAG/USD) rose to around $33.90 in European trading on Tuesday, as persistent geopolitical tensions in the Middle East, uncertainties over the world economy and the US presidential election supported the white metal.
Iran’s Supreme Leader Ayatollah Ali Khamenei has responded cautiously to Israel’s attack on the country, saying the attack should not be “false or fake” but that rapid-fire language should be discouraged. Iranian President Masoud Pezeshkian said the country would respond “appropriately” to the attack, which killed at least four soldiers, according to the BBC.
Market participants will be closely monitoring the evolution of geopolitical risks in the region. An uptrend could benefit the currency by encouraging safe-haven flows.
Major banks around the world have begun easing monetary policy and cutting interest rates, while expectations that the Federal Reserve (Fed) will continue to cut interest rates at its November meeting could also support the non-yielding metal.
But the Fed’s weak projections for expansion could limit the fund’s rise. Financial markets expect the Federal Reserve to cut interest rates by 25 basis points (bps) at its policy meetings in November and December.
Later this week, the U.S. will release quarterly gross domestic product (GDP), September personal consumption expenditures (PCE) price index and nonfarm payrolls (NFP) data. These reports could provide some clues about the size and pace of the Federal Reserve’s rate cuts.
