Silver price advances on Japan's fiscal outlook, safe-haven demand

NEW YORK (February 9) Silver (XAG/USD) posts a strong advance at the start of the week and holds near $80.25 per ounce at the time of writing, up 3.60% on the day. The white metal benefits from renewed interest amid reflation trades, fueled by political developments in Japan and persistent expectations of monetary easing in the United States (US).

Markets are reacting in particular to the election victory of Prime Minister Sanae Takaichi’s ruling coalition in Japan, a result that strengthens expectations for expansionary fiscal policies. Such an outlook is generally associated with rising inflation expectations, which underpins demand for Silver, often viewed as a hedge against the erosion of purchasing power.

At the same time, Silver retains a defensive appeal. Despite talks between the United States and Iran in Oman aimed at easing regional tensions, geopolitical uncertainty remains. Tehran has reiterated that it will not suspend nuclear enrichment, while Washington has indicated that further negotiations could take place this week. This fragile backdrop continues to support demand for safe-haven assets.

On the US macroeconomic front, investors are adopting a cautious stance ahead of major data releases, particularly employment figures. These indicators are expected to provide clearer signals on the future path of monetary policy from the Federal Reserve (Fed). Markets broadly anticipate interest rates to remain unchanged in the near term, with potential cuts later in the year, a scenario that remains supportive for non-yielding precious metals such as Silver.

Overall, the combination of reflation prospects, expectations of monetary easing and a still-uncertain geopolitical environment allows Silver to maintain a bullish bias in the near term, as market participants stay focused on upcoming US macroeconomic data.

FXStreet