Silver consolidates as markets await Fed decision amid geopolitical tensions

LONDON (December 8) Silver (XAG/USD) remains stable at the start of the week, trading around $58.40 on Monday at the time of writing, up 0.1% on the day. The white metal extends its consolidation phase, as investors avoid taking fresh positions before the Federal Reserve’s policy announcement on Wednesday. This cautious stance keeps XAG/USD confined within its tight multi-session range.

Markets continue to anticipate another cut to the Federal Funds Rate at the final meeting of the year, which would bring the target range down to 3.50%-3.75%. However, the slowdown in disinflation shown by recent price indicators, alongside more mixed labour-market signals, is prompting investors to consider a more measured pace of monetary easing into 2026. This outlook is helping to stabilize the US Dollar (USD) and push Treasury yields higher, acting as a headwind for Silver in the short term.

Recent US household spending and inflation data, particularly the Personal Consumption Expenditures (PCE) index, the Fed’s preferred gauge, suggest that disinflation is losing momentum. Meanwhile, labour-market figures have delivered mixed signals, including weaker private-sector job creation and a decline in jobless claims. These developments heighten uncertainty over the magnitude of upcoming monetary easing, reinforcing the cautious tone across markets, including Silver.

At the same time, geopolitical risks continue to provide structural support for safe-haven assets. Ongoing Russia-Ukraine tensions and the deterioration in Southeast Asian diplomatic relations sustain defensive demand, a trend also reflected recently in the Gold (XAU/USD) market dynamics.

Against this backdrop, the Fed’s decision is expected to be the key source of volatility for XAG/USD this week. Until then, Silver remains locked in consolidation, within a market dominated by caution and a mild recovery in the US Dollar.

FXStreet