Silver Takes Center Stage
The price of silver rose to a 13-year high on Thursday, June 5, reaching as high as $36.03 per ounce before retreating to around $35.50 as US markets opened. This surge in price comes as recent economic and geopolitical events have led analysts to expect a rate cut from the US Federal Reserve in September, driving safe-haven buying of both silver and gold.
Economic Factors Contributing to Silver’s Rise
The US Federal Reserve has maintained its benchmark rate at 4.25 to 4.5 percent since November 2024. However, with the current economic landscape, there is a growing expectation of a rate cut. The CME Group’s FedWatch tool indicates that half of market respondents anticipate a 0.25 percent cut at the Fed’s September meeting, while the other half is divided between the Fed maintaining its current rate and a deeper 0.5 percent cut.
Geopolitical Tensions
The recent phone call between US President Donald Trump and Russian President Vladimir Putin has also played a role in the increase in silver’s price. Following their discussion, Trump stated that a near-term ceasefire between Russia and Ukraine is unlikely, which has contributed to the uncertainty and instability in the market. Putin has vowed to respond to recent attacks by Ukraine that destroyed more than 40 nuclear-capable aircraft, further escalating tensions.
Economic Data and Its Impact
The US weekly unemployment insurance report showed an advance figure for seasonally adjusted initial claims of 247,000 for the week ended on May 31, with the four-week average reaching 1.9 million, the highest level since November 27, 2021. Additionally, the US Bureau of Labor Statistics reported that nonfarm labor productivity decreased 1.5 percent in the first quarter of the year, as output decreased 0.2 percent and hours worked increased 1.3 percent. These economic indicators suggest a slowing US economy, which, combined with the ongoing trade tensions, has led to increased pressure on the global economy.
Performance of Other Markets
In contrast to silver, gold and equity markets were not performing as well on Thursday. Gold was down by 0.5 percent in morning trading, falling to $3,353.66 per ounce, despite having surged more than 25 percent this year and setting numerous new price records. The S&P 500 was flat, recording a 0.14 percent decline to 5,961, while the Nasdaq-100 rose 0.24 percent to 21,776, and the Dow Jones Industrial Average remained unchanged at 42,422.
Conclusion
The recent surge in silver’s price to a 13-year high reflects the complex interplay of economic and geopolitical factors currently influencing the market. As the global economy continues to face challenges, including trade tensions and geopolitical uncertainties, precious metals like silver and gold are likely to remain a focus for investors seeking safe-haven assets. The anticipated rate cut by the US Federal Reserve in September and the ongoing economic data will continue to shape the trajectory of silver’s price in the coming months.
