Silver prices soaring on US rate-cut prospects

Korea Economic Daily

Summary

It reported that international silver futures and related ETFs·ETNs prices rose sharply on the U.S. central bank (Fed)'s rate-cut outlook.
"KODEX Silver Futures" and "Samsung Silver Futures ETN" and other domestic silver-related products also recorded high gains this month.
It said experts emphasized that, besides rate cuts, increased silver demand from growth in the artificial intelligence (AI) industry is a driver of price increases.

Silver futures prices up 11.3% this month

Related ETFs·ETNs also rose

International silver prices are rising sharply. This is because the U.S. central bank (Fed) is more likely to cut its benchmark rate next month.

According to the New York Mercantile Exchange, on the 26th silver futures (March next year contract) closed at 53.61 dollars per troy ounce, up 3.83% from the previous trading day. It has risen 11.32% so far this month. This far outpaced gold futures (February next year contract), which rose 5.15% over the same period.

Silver-related exchange-traded funds (ETFs) showed the same trend. "KODEX Silver Futures" closed at 9270 won on the 28th, up 1.76%. Its gain this month is 10.69%. Prices of silver futures exchange-traded notes (ETNs) are also rising. "Samsung Silver Futures ETN" and "Korea Investment & Securities Silver Futures ETN" rose 11.30% and 15.02% this month, respectively. This contrasts with the KOSPI index, which fell 4.40% over the same period.

The market says these price changes are due to renewed expectations of Fed rate cuts. The expansion of the artificial intelligence (AI) industry, which increases silver demand, is also a factor putting upward pressure on prices. Silver is a key metal used in semiconductors, solar panels, electric vehicles, and others. Half of silver demand is industrial.

Outlooks strongly suggest silver prices will rise at least through the first half of next year. Hwang Byung-jin, a researcher at NH Investment & Securities, advised, "Under a U.S. rate-cut cycle, the likelihood of a rise is higher," adding, "However, if concerns about an economic recession become prominent, downward pressure on prices could be greater than for gold."

Reporter Seongmi Shim smshim@hankyung.com