Spot silver staged a rebound from its one-year low. During Wednesday’s Asian session, the metal touched an intraday high of $51.83 per ounce, up around 4.1%. Silver had previously dipped near the one-year low of $48.60 recorded on November 3. Supported by buying interest at lower levels, prices recovered above the $51 mark amid renewed uncertainty over the outlook for US fiscal policy.

US voters cast ballots in the midterm elections on Tuesday to decide control of Congress for the final two years of the presidential term. Real-time vote results showed that 253 out of 435 House seats had been called. Democrats secured 152 seats and Republicans 101, with both parties still short of the 218-seat threshold for a majority.

Changes in congressional control have brought uncertainty to the direction of US fiscal policy, including potential adjustments to taxation, spending and debt trajectories. As a US-dollar-denominated asset, silver is indirectly affected by shifts in investor allocation toward dollar assets. After partially pricing in such uncertainty at depressed levels, the market has reassessed its impact on silver.

Oil prices lingered near a four-week low amid mixed signals surrounding US-Iran negotiations. Easing energy costs helped ease inflation concerns and offered mild support for non-yielding silver. Even so, CME FedWatch data showed the market was pricing a roughly 78% probability of a Fed rate hike in December. The supportive effect from softer oil prices remained limited, while hawkish rate expectations continued to cap silver’s upside. The latest recovery was mainly driven by dip buying and repricing of political risks.

The gold-silver ratio had climbed to 80, reflecting silver’s underperformance relative to gold. The ratio has since retreated as silver rebounded above $51, signalling early signs of a recovery in silver’s relative performance. Silver carries both precious and industrial attributes, making it more sensitive to economic growth and policy shifts. A sustained reversal of its underperformance would require broader stabilization across the precious metals complex.

Public supply and demand projections indicate the global silver market is set to register an annual supply deficit for a sixth consecutive year. Industrial demand from AI data centres, electronics and power grid investment may offset reductions and substitution in the solar sector. Meanwhile, rising mine output and recycled supply are set to narrow the deficit. Headwinds including a strong US dollar, elevated Treasury yields and subdued industrial and jewellery demand will continue to limit silver’s upside potential.