Silver Price Tops $40 as Fed Rate Cut Bets Boost Precious Metals

Fed Rate Cut Expectations Push Silver Price Above $40

Spot silver prices surged past $40 per ounce this week, reaching $40.72/oz on Monday—the highest level since September 2011. This rally marks a major milestone in the ongoing precious metals bull run, largely fueled by investor expectations of imminent US Federal Reserve rate cuts. Gold followed suit, nearing its April peak of $3,500/oz.

Several analysts, including Saxo Bank’s Ole Hansen and Charu Chanana, attribute the momentum to sticky inflation, weak US consumer sentiment, and technical breakouts. The breach of key resistance levels triggered buying activity across both metals. In parallel, tight silver supply conditions continue to support bullish sentiment, according to KCM Trade’s Tim Waterer.

Silver Outlook Strengthens Amid Economic and Political Tensions

Policy comments by San Francisco Fed President Mary Daly have solidified expectations of a September rate cut. This has increased investor appetite for precious metals like silver, which benefit from lower interest rates and a weaker US dollar. UBS analyst Giovanni Staunovo said upcoming US jobs data could reinforce the Fed’s dovish pivot, further enhancing silver price support.

Geopolitical risks also play a role. Former President Donald Trump’s public criticism of the Fed and an ongoing legal dispute over the dismissal of Fed Governor Lisa Cook have raised concerns about central bank independence. Meanwhile, a federal court’s ruling on global tariffs adds to market volatility, further boosting silver’s haven appeal.

Investment banks are turning increasingly bullish. Morgan Stanley forecasts a potential 10% upside for gold and noted silver is already trading near its target range, with “potential to overshoot” given market dynamics like ETF inflows and strong Indian imports.

SuperMetalPrice Commentary:

The silver price crossing $40 is more than a psychological milestone—it’s a signal of shifting macroeconomic winds. Investors are positioning for monetary easing, and silver stands to benefit both as a precious metal and an industrial input. With supply constraints, geopolitical uncertainty, and renewed ETF interest, silver may outperform gold in the near term. However, traders should closely monitor upcoming US employment data and Fed policy signals to gauge sustainability.