Silver Continues to Shine

Commodity

Summary:

This move, across the PM complex, has been driven by largely by three factors – increased demand from central banks (especially in EM) seeking to diversify their reserve holdings.

This move, across the PM complex, has been driven by largely by three factors – increased demand from central banks (especially in EM) seeking to diversify their reserve holdings; investor worries about the inflation outlook, chiefly the risk of higher inflation becoming embedded; and, the unsustainable fiscal path on which most DM economies continue, with government spending, frankly, out of control.

Perhaps one of the most interesting things about the recent rally is the way in which silver has been trading almost tick-for-tick with gold. This is somewhat unusual given how silver is typically much more risk-sensitive than its golden cousin, and suggests that physical demand (aka hoarding) for precious metals is one of the biggest drivers of upside right now.

On that note, while the rally has come a very long way this year, there are several indications that the move has more room to run. In terms of physical demand, in particular, while holdings of silver in ETFs have risen substantially in 2025, they are still some considerable way ff the highs seen in early-2021, again suggesting potential for further upward pressure on price if demand continues to increase.

From a fundamental perspective, there is little which leads me to believe that any of the three main drivers of the rally mentioned earlier are likely to shift substantially any time soon. EM reserve allocators are likely to increasingly diversify reserves, especially as President Trump's ‘America First' policies continue; the risk of inflation expectations becoming un-anchored continues to linger, especially as the Fed cut rates and embark on a ‘run it hot' strategy; while, government spending shows no sign of slowing any time soon, chiefly in the US, where the deficit already stands at roughly 7% of GDP, a level only previously seen during recessions.

That said, no asset tends to go up in a straight line forever, and in many ways pullbacks within a longer-run rally are a healthy and normal part of market functioning, which actually result in a more durable overall trend.

Right now, spot silver is running into a little resistance around $47.50/oz, which coincides with the levels seen in 2011, just prior to the spike to record highs seen in April of that year. If the market is able to convincingly clear this level, then a move back to those record highs, and probably north of $50/oz for the first time, seems almost a given. Taking into account the distinct lack of any notable levels between these two points, such a move, were it to occur, could be explosive and rapid in nature.

To the downside, given the rapid nature of the recent rally, notable support doesn't really emerge until the 50-day moving average at $40.50/oz, beneath which the 2012 highs at $37.50/oz lurk. Prior to this recent bull trend, $35/oz had been a ‘cap' on price for some time, and obviously is a notable level as a result, though my view is that a test of that level seems a very long shot indeed at this moment in time.

Overall, then, the fundamental bull case for silver continues to hold water, while momentum clearly remains with the bulls for the time being. To lean on an old market adage, ‘the trend is your friend' very much seems to apply here, with further upside likely on the cards short-term, and any dips representing medium-term buying opportunities.

Source: Pepperstone

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Gerik

Economic

Commodity

Gold Stabilizes Amid Economic Uncertainty

Gold prices steadied near $3,870 an ounce, slightly below Wednesday’s peak, after a five-day surge driven by expectations of additional Federal Reserve interest-rate cuts. The U.S. government shutdown has delayed the release of crucial nonfarm payroll data, forcing investors and policymakers to rely on alternative indicators such as ADP Research’s report, which showed a sharp decline in private-sector payrolls in September. The shutdown’s impact on economic transparency has intensified market bets that the Fed will reduce rates twice more this year to support a weakening labor market.

Lower borrowing costs tend to support non-yielding assets like gold, while a softer U.S. dollar makes bullion more affordable for international buyers. Spot gold added 0.2% to $3,872.77 per ounce as of early trading in London, extending a modest gain from the previous session.

Record Year for Gold and ETF Inflows

Gold has gained 47% in 2025, positioning it for the largest annual increase since 1979. Central banks have been significant buyers, while holdings in gold-backed exchange-traded funds (ETFs) have also risen sharply. Bloomberg data show that September recorded the largest monthly ETF inflows in three years. Chinese investors contributed notably to this trend, with inflows into the four most popular gold ETFs rebounding after a period of weak demand.

Political and Regulatory Developments

Investors are also factoring in U.S. political events. The Supreme Court denied former President Donald Trump’s request to remove Federal Reserve Governor Lisa Cook, preserving her position while she litigates to remain in office. The ruling may ease some concerns over potential political interference in the Fed, which could temper demand for gold as a safe-haven asset in the short term.

Other Precious Metals and Currency Movements

Silver edged higher following a 14-year peak in the previous session, while platinum and palladium also posted gains. The Bloomberg Dollar Spot Index remained largely unchanged, indicating that currency movements did not significantly affect the precious metals market.

Gold continues to benefit from a combination of economic uncertainty, Fed rate-cut expectations, and safe-haven demand amid the U.S. government shutdown. With limited official economic data and ongoing geopolitical and regulatory developments, gold remains attractive to investors seeking protection against market volatility, while ETF inflows and central bank purchases sustain the momentum.

Source: Bloomberg

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ING

Economic

Forex

The unemployment rate increased from 6.2 to 6.3% in August. While an increase in the jobless rate is never a good thing, we’d be hesitant to read too much into today’s number. The increase in the number of unemployed people was 11,000 higher than in July, but still 136,000 lower than in June. That puts this uptick into perspective.

But employment expectations have steadily weakened over recent years, which means that job growth is under pressure. In September, the Employment Expectations Index by the European Commission ticked down to the lowest level since 2021. Manufacturers are becoming less negative about hiring prospects, but the service sector saw solid job prospects falter last month.

And businesses are pushing for productivity gains as wages have increased significantly over recent years. Yet despite all of that, the labour market continues to see unemployment near all-time lows for now.

That said, the job market in the eurozone is also quite divided between the south and north. The south is seeing stronger job growth – especially in the private sector – with more structural declines in unemployment. Weaker economic growth in the north of the eurozone is also reflected in more upward pressure on unemployment. This means that while the average eurozone job market performance is quite strong, weak spots can easily be found right now.

Source: ING

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Daniel Carter

Political

Demonstrators in more than 240 locations around France are due to stage more protests and strikes on Thursday, the CGT union said, to demand the government scraps looming budget cuts.

President Emmanuel Macron and newly appointed Prime Minister Sebastien Lecornu, who is still working to form a cabinet, are under pressure to bring the finances under control in the euro zone's second largest economy.

But union leaders, including those from the hardline CGT and France's largest union, the CFDT, want more spending on public services, higher taxes on the wealthy and the scrapping of a change to state pensions.

"First of all, what we want to know is who the government will be ... And then we want to know what the budget will be, and if there are any setbacks in the budget, obviously we won't let it pass," CGT secretary general Sophie Binet told BFM TV.

Students carrying flares were already blocking the entrance to a high school in Paris, with police at the scene, as protests got under way.

More protests were expected in Paris and other cities including Dijon, Metz, Poitiers and Montpellier.

Around 76,000 police officers are due to be deployed, with about 5,000 in the Paris region, Interior Minister Bruno Retailleau told BFM.

The government faced protests and strikes in September, when hundreds of thousands of people including teachers, train drivers, pharmacists and hospital staff protested against France's proposed 2026 budget, and teenagers blocked dozens of high schools for hours.

France's budget deficit last year was close to double the EU's 3% ceiling. Lecornu will face a battle to gather parliamentary support for a budget for 2026.

Parties broadly agree on the need to slash the deficit, which reached 5.8% of GDP in 2024, but not on how to do it.

His predecessor, Francois Bayrou, was ousted by parliament on September 8 over his plan for a 44-billion-euro ($51.70 billion) budget squeeze. Lecornu has not yet said what he will do with Bayrou's plans.

Source: Reuters

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Samantha Luan

Economic

Stocks

Political

Malaysia is on the right trajectory to strengthen its position in the global semiconductor industry, with ongoing policy support and industry efforts to build design and innovation capabilities, according to American multinational semiconductor company Analog Devices Inc (ADI).

“Malaysia is making all the right moves,” said George Chia, Asean regional business director of ADI, during a media roundtable on Thursday. “Penang has traditionally been a driving force in backend operations, and now Malaysia is trying to really move up the stack into integrated circuit (IC) design and innovation.”He noted that Malaysia enjoys a head start over other regional peers, with a stronger ecosystem and government push to develop local expertise.“Other countries are still initiating efforts to understand the semiconductor landscape. Malaysia has already made significant progress,” he added.

Chia said ADI, which is a company listed on Nasdaq, is expanding its presence in Penang, where the group has set up a new building to prepare for further growth. He stressed that the company is investing in people, highlighting that its factory workforce in Penang is made up predominantly of locals.“We are investing in people. Talent is the key question everywhere, especially in semiconductors and electronics,” he said.

“Every country is competing for semiconductor and IC design engineers, and Malaysia is no different. That is why we are working hard to build a strong talent pipeline through Science, Technology, Engineering, and Mathematics (STEM) awareness and education.”He added that multinational companies, local firms and policymakers must work together to ensure a strong pipeline of skilled workers for the industry.

Collaboration with Mimos to boost design capability

Earlier on Thursday, ADI signed a Memorandum of Understanding with the Malaysian Institute of Microelectronic Systems Bhd (Mimos), the country's national applied research agency, to advance Malaysia’s IC design capabilities and strengthen the ecosystem for small and medium-sized enterprises (SMEs).

Under the collaboration, ADI will provide technical expertise and guidance on circuit design, solution development and best practices, while Mimos will contribute its localisation knowledge and industry insights.“Our collaboration with Mimos is really about sharing our technology and solutions with their ecosystem of local companies,” Chia said. “Mimos is already engaging SMEs with applied research. By combining that with ADI’s technology, we can enable more local firms to move up the value chain.”

He pointed to the recent milestone of Malaysia’s first locally designed AI chip, MARS1000 by SkyeChip, as a sign of progress, noting that such breakthroughs could spur other firms to innovate and compete at higher levels.Chia stressed that Malaysia’s next phase must focus on board-level and analog design, rather than relying only on assembly and testing.“We need to elevate the design capability to really have ‘made by Malaysia’ companies,” he said.

Source: Theedgemarkets

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Gerik

Economic

Taiwan’s Strategic Investment Proposal

Taiwan is actively discussing a high-tech strategic partnership with the United States, focusing on expanding U.S. investment, particularly in the semiconductor sector. Taiwan’s Vice Premier Cheng Li-chiun, who is overseeing tariff negotiations with Washington, highlighted that the goal of the talks is not to shift supply chains but to enhance U.S. production capacity with Taiwanese investment. Taiwan, home to the world’s largest contract chipmaker, TSMC, runs a substantial trade surplus with the U.S., but its exports face a 20% tariff, which Taipei seeks to reduce.

Cheng emphasized that the proposed “Taiwan model” for investment would involve industrial investment planning, supported by government initiatives like export credit guarantees and joint Taiwan-U.S. development of industrial clusters. This model aims to support U.S. production capacity growth, aligning with both Taiwan’s industrial strengths and U.S. domestic demand.

TSMC’s Role in U.S. Investment and Taiwan’s Position

TSMC, Taiwan’s semiconductor giant, has already committed to a significant U.S. presence, investing $165 billion to build chip factories in Arizona. However, most of its production will continue in Taiwan. This strategy reflects Taiwan’s intent to keep its manufacturing base in Taiwan while expanding its international operations. Cheng clarified that TSMC was not involved in the latest round of talks and rejected a proposal floated by U.S. Secretary of Commerce Howard Lutnick for a 50-50 split in chip production between the U.S. and Taiwan.

Taiwan’s approach to this strategic partnership centers on remaining rooted in its domestic industry while promoting bilateral cooperation with the U.S. to meet mutual economic and technological goals.

Ongoing Negotiations Amid U.S. Shutdown

As the U.S. government entered a shutdown, the future of the talks remained uncertain. Despite this, Taiwan continues to focus on its long-term strategic interests, balancing the need for expanded cooperation with the U.S. and its goal of retaining Taiwan as the global hub for semiconductor production.

Taiwan’s exploration of a high-tech strategic partnership with the U.S. signals a strong desire to enhance bilateral cooperation while maintaining its core industrial capabilities. Taiwan’s commitment to expanding U.S. production capacity without relocating its supply chains reflects a pragmatic approach that seeks to benefit both economies, with Taiwan at the center of global semiconductor innovation.

Source: Reuters

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Samantha Luan

Economic

Political

Forex

There’s little doubt that Ukraine has an interest in escalating NATO-Russian tensions through these means, including by employing anti-government Russian and Belarusian nationals in this reported plot, but it’s debatable whether Poland is involved in this and the extent to which it might be if so.

Russia’s Foreign Intelligence Service (SVR) warned that Ukraine’s GUR and the Polish intelligence services (none of the several existing ones were specified) are cooking up a false flag attack in Poland, which might “involve a simulated attack on critical infrastructure”, in order to blame Russia and Belarus.According to them, “Kiev hopes to incite European countries to respond to Russia with the harshest possible force, preferably militarily.”

The veracity of these dramatic claims will now be assessed.

In reverse order, it does indeed appear to be the case that Kiev wants to manipulate NATO members into initiating direct military force against Russia, whether in the special operation zone or elsewhere such as on the territory of its Belarusian mutual defense ally or in its exclave of Kaliningrad. This explains why Zelensky repeated his no-fly zone demands after the suspicious Russian drone incident in Poland and called for closing the Danish Straits to Russian shipping after similarly suspicious incidents in Scandinavia.

Of relevance, SVR claimed that the aforesaid Polish incident and an associated Romanian one were Ukrainian provocations, though it’s still unclear exactly what happened. In any case, it’s also relevant to mention the reports amplified by Russian Foreign Ministry spokeswoman Maria Zakharova that Ukraine is preparing a false flag drone provocation against NATO as well as Zelensky’s partial responsibility for Trump’s flip-flip on Ukraine, all of which lend credence to suspicions about Ukraine’s motives.

Moving along, the part of their report about how “militants from the ‘Freedom of Russia Legion’ and the Belarusian ‘K. Kalinovsky Regiment’” have been selected for this next provocation might also be true since they’re known to be Ukrainian proxies, so each’s nationals could indeed be implicated in this plot. That would in turn make it more likely that NATO, including the US, is misled about who’s responsible. As for their claim of Poland’s joint involvement in orchestrating this, however, that’s much more debatable.

Conservative-nationalist Polish President Karol Nawrocki and his National Security Bureau weren’t informed by liberal-globalist Prime Minister Donald Tusk’s government that the damage incurred by a home during last month’s drone incident was caused by a wayward Polish missile. They only found out after a source leaked this to the press, which followed Tusk’s government blaming that damage on Russia at an emergency UNSC meeting, thus suggesting that he wanted to manipulate Nawrocki and his allies.

As assessed here, the purpose was to deceive him into authorizing Polish participation in a no-fly zone over Ukraine in order to raise NATO-Russian tensions, with these convoluted means being employed due to his reluctance to further embroil Poland in the conflict. Circling back to SVR’s report, either their source about Poland’s joint involvement in this latest plot is wrong or subversives within its “deep state” are going behind Nawrocki’s back, but the point is that it’s unrealistic to imagine that he’s in on it.

As a reminder, some of SVR’s reports didn’t pan out such as their ones about US plans to replace Zelensky, which were critiqued here in summer 2024. It should also go without saying that Russia truly has no reason to risk an escalation of tensions with NATO by attacking Poland as explained here, here, and here in summer 2023. Nevertheless, given the credible possibility that Ukraine is plotting a false flag attack on Poland, Nawrocki and his own “deep state” allies should urgently launch an investigation.