The price of an ounce of silver has exceeded $40 for the first time since 2011, driven by growing expectations of an interest rate cut by the US Federal Reserve this month, which boosted investor demand for precious metals.

Silver has gained more than 40% since the beginning of this year, in a rally that coincided with rising prices of gold, platinum, and palladium.

Investor interest in silver-backed exchange-traded funds (ETFs) has increased. Holdings of the metal expanded for the seventh consecutive month in August, marking the longest inflow streak since 2020. This has contributed to continued supply shortages in the market.

Silver is also valued for its industrial uses in clean energy technologies, including solar panels. Under these conditions, the market is heading toward a fifth consecutive year of supply deficit, according to the Silver Institute, an industry group.

Investors have heavily invested in silver-backed ETFs. Holdings expanded for the seventh straight month in August, recording the longest inflow wave since 2020. This led to a decline in the readily available metal stock in London, resulting in ongoing supply tightness in the market.