Silver prices rose in the European market on Monday, extending gains for a third consecutive session and hitting a new 14-year high after breaking above $47 per ounce for the first time since 2011, supported by the ongoing decline in the US dollar.

The rally is also being fueled by accelerating demand from retail investors, who view silver as undervalued compared to gold, which continues to reach record highs.

Price Overview

• Silver prices today: The metal climbed 2.45% to $47.19, the highest since May 2011, up from an opening of $46.07, with a session low of $45.95.

• On Friday, silver settled 1.95% higher, its second straight daily gain, after revised US consumer inflation data.

• Last week, silver advanced nearly 7%, marking a sixth consecutive weekly gain amid strong demand for the white metal.

US Dollar

The dollar index fell 0.3% on Monday, extending losses into a second session and retreating from a three-week high of 98.61, reflecting continued weakness of the greenback against major peers.

A weaker dollar makes dollar-denominated commodities cheaper for holders of other currencies. In addition to profit-taking, the dollar remains pressured by the looming risk of a US government shutdown and strong expectations that the Federal Reserve will cut interest rates in October and December.

To reprice these expectations, markets are awaiting a series of key US labor market reports this week along with comments from Fed officials.

Retail Demand

As retail investors search for financial assets to hedge against risks tied to the global shift toward looser monetary policy, silver is emerging as the most attractive, undervalued option compared with gold.

The current surge in silver prices reflects increased recognition among retail traders that the white metal remains significantly undervalued relative to gold, even as the latter continues setting fresh record highs.

The US dollar fell on Monday amid concerns over a potential partial government shutdown, while the Japanese yen outperformed the euro ahead of a series of key US economic releases that could provide further signals on the Federal Reserve’s policy path.

The dollar had risen last week, supported by economic data that reduced expectations for Fed rate cuts. Traders are currently pricing in a total of 40 basis points in cuts by December, and 110 basis points by the end of 2026 — about 25 basis points less than anticipated in mid-September.

Partial Government Shutdown Looms

The dollar index, which tracks the greenback against a basket of major currencies, dropped 0.22% on Monday to 97.90, after gaining 0.5% last week.

Investors’ primary concern is the risk of a government shutdown if Congress fails to pass a funding bill before the fiscal year ends on Tuesday. Without a deal, parts of the government would shut down on Wednesday, the first day of fiscal year 2026.

Analysts note that the dollar typically weakens ahead of such crises before rebounding once a deal is reached. However, this time the risk may weigh more heavily given the labor market’s existing signs of slowdown. A shutdown could also delay the release of the closely watched nonfarm payrolls report due Friday, along with other economic data.

Bob Savage, head of macro markets strategy at BNY, said: “A prolonged shutdown, which cannot be ruled out, could impair the market’s ability to properly price the Fed’s easing cycle, even if some private data sources help fill part of the gap.”

Investors are also awaiting this week’s reports on job openings, private sector payrolls, and the ISM manufacturing index ahead of Friday’s employment data.

Legal Battle Over Fed Governor Lisa Cook

Markets are closely watching the legal fight over the potential dismissal of Fed Governor Lisa Cook, as any threat to the central bank’s independence poses a bigger risk to the dollar than the shutdown itself.

President Donald Trump’s administration has asked the Supreme Court to allow him to remove Cook, arguing it represents a lawful exercise of presidential authority.

Currency Moves

The euro rose 0.25% to $1.1729, while the British pound gained 0.34% to $1.3445. Analysts believe eurozone inflation data will have limited impact on monetary policy expectations or the single currency, with attention instead focused on the war in Ukraine and the potential for increased military spending.

Against the yen, the dollar fell 0.6% to ¥148.67, after gaining more than 1% last week. Still, diverging monetary policy outlooks remain in focus as signs of a hawkish tilt emerge within the Bank of Japan.

Mohit Kumar, economist at Jefferies, said: “We prefer short positions on USD/JPY and expect further rate hikes from the Bank of Japan.” He added that “some Asian countries may allow their currencies to strengthen as part of trade negotiations with the US.”

Elsewhere, the Australian dollar climbed 0.35% to $0.6571 ahead of Tuesday’s policy decision from the Reserve Bank of Australia, where no change in rates is expected.

Gold prices rose in the European market on Monday, extending gains for a third consecutive session and continuing to set fresh records, as they broke above the $3,800 per ounce mark for the first time ever. The rally was fueled by a weaker US dollar, pressured by the looming risk of a federal government shutdown.

Following last week’s US Personal Consumption Expenditures (PCE) report, markets became more convinced of the likelihood that the Federal Reserve will cut interest rates in October, with investors awaiting further evidence later this week.

Price Overview

• Gold prices today: Spot gold rose about 1.4% to an all-time high of $3,812.11, up from an opening level of $3,760.36, with a session low matching the open at $3,760.36.

• On Friday, gold settled 0.3% higher, marking its second straight daily gain after moderate US inflation data.

• Last week, gold climbed 2.1%, its sixth consecutive weekly gain, the longest winning streak since late December 2024.

US Dollar

The dollar index fell 0.3% on Monday, extending losses into a second session and pulling back from a three-week high of 98.61, reflecting continued weakness against major currencies.

A weaker dollar makes dollar-priced bullion more attractive to holders of other currencies. In addition to profit-taking, the greenback remains under pressure from the risk of a US government shutdown if Congress fails to pass a funding bill before the fiscal year ends on Tuesday. Without a deal, parts of the government will shut down on Wednesday, the first day of fiscal year 2026.

Ray Attrill, head of FX strategy at National Australia Bank, said: “The prevailing assumption is that if the government shuts down, we won’t get new US jobs data this week, which complicates trading in markets.”

US Interest Rates

• Last Friday’s PCE inflation data matched expectations.

• According to the CME FedWatch Tool: Odds of a 25-basis-point Fed rate cut in October rose from 88% to 90%, while odds of no change fell from 12% to 10%.

• To further reprice expectations, markets are awaiting a series of key US labor market reports this week, along with fresh Fed commentary.

Outlook for Gold

• Kyle Rodda, analyst at Capital.com, said: “The positive US inflation reading gave markets reason to believe more Fed rate cuts will come in October and December.”

• He added: “Sentiment is very positive, and we’re on track to retest another record high this week. The gold market is in a strong position right now.”

SPDR Holdings

Holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by 8.87 metric tons on Friday to 1,005.72 metric tons, the highest since July 29, 2022.

The euro rose in European markets on Monday against a basket of global currencies, extending its rebound for a second straight day from a three-week low against the US dollar, supported by renewed buying at lower levels and a defensive turn in the greenback amid risks of a US government shutdown.

Following the latest European Central Bank (ECB) meeting, which included more hawkish commentary than markets had anticipated, the odds of further rate cuts in Europe by year-end have diminished. To solidify those expectations, investors are awaiting more evidence on the ECB’s path toward monetary easing.

Price Overview

• EUR/USD climbed about 0.25% to $1.1733, up from an opening at $1.1706, after touching a low of $1.1699.

• On Friday, the euro gained 0.3% against the dollar, its first increase in three sessions, recovering from a three-week low of $1.1646.

• Last week, the euro lost 0.4% versus the dollar, its first weekly decline in a month, pressured by mounting geopolitical tensions in Eastern Europe.

US Dollar

The dollar index fell 0.3% on Monday, extending losses for a second session and moving further away from a three-week high of 98.61, reflecting continued weakness of the greenback against major peers.

Beyond profit-taking, dollar levels are being weighed down by the looming risk of a US government shutdown if Congress fails to pass a funding bill before the fiscal year ends on Tuesday. Without passage, parts of the government will close on Wednesday, the first day of fiscal year 2026.

Ray Attrill, head of FX strategy at National Australia Bank, said: “The prevailing assumption is that if the government shuts down, we won’t get new US jobs data this week, which complicates trading in the markets.”

European Interest Rates

• Sources say ECB policymakers believe no further rate cuts are needed to achieve the 2% inflation target, despite new economic forecasts suggesting lower rates over the next two years.

• Sources also noted that unless the eurozone faces another major economic shock, borrowing costs are expected to remain at current levels for some time.

• Money market pricing currently reflects about a 10% chance of a 25-basis-point ECB rate cut in October.

• Traders have scaled back bets on ECB easing, signaling the end of this year’s rate-cutting cycle.

• To reprice expectations, investors are awaiting fresh European economic data and commentary from ECB officials in the coming period.