Silver prices surged beyond $61.8 per ounce on Wednesday, continuing a record-breaking rally. This movement came as markets absorbed the Federal Reserve's 25 basis point interest rate cut, alongside Federal Reserve Chair Powell's statements, which were interpreted as relatively dovish, even though the committee maintained a cautious outlook. While the rate cut itself was largely anticipated, Powell's commentary, coupled with a weaker dollar, reduced the opportunity cost of holding precious metals. Additionally, the physical silver market has significantly tightened, enhancing the effects of monetary policy changes.
Exchange-traded fund (ETF) inflows and spot transactions have increased dramatically this year, with substantial additions last week alone. Meanwhile, demand from official sources and retail sectors in Asia and India remains strong, consequently depleting available silver supplies. As a result, lease rates and borrowing costs for physical silver have climbed, indicating genuine supply delivery challenges rather than mere speculative trading. Moreover, consistent industrial demand from sectors like solar energy, electric vehicles (EVs), and data infrastructure continues to rise, with independent supply analyses indicating an ongoing deficit.