- Silver price faced headwinds as the Fed maintained the federal funds rate at 4.25%–4.5% on Wednesday
- The non-yielding Silver may have found support as US Treasury yields declined.
- Silver lease rates have surged due to shrinking stockpiles in London.
Silver price (XAG/USD) holds onto gains after a previous session of losses, trading around $33.80 per troy ounce during Asian hours on Thursday. However, the non-interest-bearing metal faces pressure following the Federal Reserve’s (Fed) interest rate decision.
As widely expected, the Fed maintained the federal funds rate at 4.25%–4.5% during its March meeting but reaffirmed its outlook for two rate cuts later this year. This stance aligns with forecasts of slower GDP growth and higher unemployment, counterbalancing concerns over rising inflation in the United States (US), potentially driven by aggressive tariffs imposed by President Donald Trump.
Silver, a non-yielding asset, may have found support as US Treasury yields declined, with the 2-year yield at 3.97% and the 10-year yield at 4.24%. Meanwhile, bonds gained traction following the Fed’s decision to slow the pace of quantitative tightening, citing concerns over reduced liquidity and potential risks tied to government debt limits.
Silver lease rates have surged due to shrinking stockpiles, particularly in London, as Silver flows toward the US to capitalize on higher prices. Banks and traders lease Silver to ensure short-term liquidity for trading or operational needs.
This shift has widened price gaps between major markets, with spot silver up 17% this year, outperforming other commodities. Additionally, physical Silver transfers from Canada and Mexico are strained by tariffs, further tightening supply. Growing fears of a “silver squeeze” could disrupt trade for months.
