Silver Prices Surge as Dollar Weakens and Fed Easing Hopes Rise

The price of silver (XAGUSD) has increased by 2.11% on August 16, reaching $66.02, following a seven-day gain of 0.60%. This uptrend is attributed to a broader market repricing driven by a weakening US dollar and declining benchmark yields.

A weakening US economy led market participants to reassess expectations for near-term monetary tightening by the Federal Reserve, instead boosting hopes for monetary easing. As silver is a non-yielding asset denominated in dollars, its price benefits from a lower opportunity cost due to a weaker dollar and lower real yields.

Additionally, tight physical market structure characterised by multi-year structural deficits is supporting the rise in silver prices. Despite moderation in industrial fabrication demand, overall global supply remains constrained due to sluggish mine production growth and limited secondary recovery.