Silver Forecast: XAG/USD hovers around $47.50 as safe-haven demand increases

LONDON (October 2) Silver price (XAG/USD) hovers near a new 14-year high of $47.83 reached on Wednesday, trading around $47.50 per troy ounce during early European hours on Thursday. Crude Oil prices may appreciate further amid increased safe-haven demand following the United States (US) government shutdown. The shutdown put thousands of federal jobs at risk after partisan divisions blocked Congress and the White House from reaching a funding agreement.

The US Bureau of Labor Statistics has paused virtually all activity, which may cause the delay of the September US Nonfarm Payrolls (NFP) report due on Friday. Meanwhile, the US ADP Employment Change report, released on Wednesday, showed that private sector payrolls declined by 32,000 in September, while annual pay growth was 4.5%. This figure followed the 3,000 decrease (revised from a 54,000 increase) reported in August and came in below the market expectation of 50,000.

The non-interest-bearing Silver attracts buyers as the labor market weakness boosts bets on further Federal Reserve (Fed) rate cuts. The CME FedWatch Tool suggests that markets are now pricing in a 99% chance of a Fed rate cut in October and an 87% possibility of another reduction in December.

Silver price also draws support from supply concerns, as the Silver Institute projected a global market deficit for the fifth consecutive year in 2025, with output forecast at 844 million ounces, around 100 million ounces below demand. Additionally, India doubled its imports of precious metals, including Silver, in September from August, as banks and jewellers rushed to build inventories ahead of festivals and to avoid higher import taxes, Reuters trade and government sources.

FXStreet