Silver markets staged a notable recovery on Friday, with spot prices holding around $77.30 per ounce into the weekend. The rally followed the release of softer-than-expected U.S. inflation figures, which prompted traders to increase their wagers on the Federal Reserve beginning to lower interest rates as early as June.
Inflation Data Shifts Rate Expectations
The latest Consumer Price Index report showed inflation pressures easing, leading markets to price in a nearly 70% probability of a rate cut at the Fed's June meeting. This shift weighed on the U.S. dollar and real yields, creating a more favorable environment for non-yielding assets like precious metals. "As long as CPI remains in check, the Fed is likely to proceed cautiously with a couple of rate reductions later this year," noted Chris Zaccarelli of Northlight Asset Management.
ETFs and Miners Post Strong Gains
The iShares Silver Trust (SLV), a major exchange-traded fund tracking the metal, advanced 2.9%. Silver mining equities outperformed, with Pan American Silver climbing over 6% and First Majestic Silver gaining a similar amount. This marked a sharp reversal from Thursday's steep 8.9% decline, which was triggered by strong labor market data that had temporarily dampened rate-cut expectations.
Despite the late-week rebound, silver still finished the trading week down approximately 2.1%. Trading activity was subdued ahead of the U.S. Presidents Day holiday on Monday, which is expected to result in thinner market liquidity.
Focus Turns to PCE and Futures Reopen
Investors are now looking ahead to the Fed's preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, due next week. This data could further influence the trajectory of monetary policy. COMEX silver futures are scheduled to resume trading Sunday evening, providing the next test for the metal's recovery. Analysts caution that any renewed signs of economic strength or persistent inflation could quickly reverse the recent gains, especially after a volatile week that saw significant stop-loss selling.
