Silver hits record high as markets anticipate Fed rate cut

On December 9, silver prices on the spot market surged 3%, reaching a historic high of $60.24 per ounce. Gold also advanced, climbing 0.4% to $4,235.90 per ounce.

The rise in precious metals is being driven by expectations that the US Federal Reserve will lower its benchmark interest rate by 25 basis points at the conclusion of its policy meeting on December 10, Caliber.Az reports per foreign media. 

Futures markets currently price the probability of such a cut at 89.6%, according to CME FedWatch data.

If the forecast materialises, it will mark the Fed’s third consecutive rate reduction.

"The move in gold right now is attributed to the big spike in silver and the high expectations for another quarter-point cut," said RJO Futures senior market strategist Bob Haberkorn.

The gold-to-silver ratio has also narrowed significantly, with one ounce of gold now equivalent to 71 ounces of silver, down from 82 ounces in October.

The silver-to-gold ratio of around 70 is close to the average over the past two decades, though historically it has fallen as low as 40. 

"Metals are volatile by nature, but unless we fix the deficit, silver only has one way to go, and that is up," said Maria Smirnova, senior portfolio manager and chief investment officer at Sprott Asset Management.

By Aghakazim Guliyev