Sprott Physical-U (PHYS) Dives 0.21% as Rate-Cut Hopes, Dollar Rebound Weigh on Silver ETF

The share price of Sprott Physical-U (PHYS) fell to its lowest level since September 2025 on September 9, 2025, with an intraday decline of 0.21%. The drop reflects heightened sensitivity to macroeconomic shifts and market sentiment, underscoring the ETF’s exposure to broader financial dynamics.

Recent developments in U.S. inflation data and Federal Reserve policy have emerged as key drivers. Tamer-than-expected July 2025 CPI figures—2.7% year-over-year—have intensified speculation about potential rate cuts in September 2025. A dovish Fed stance typically weakens the U.S. dollar, boosting demand for non-yielding assets like silver, which underpins PHYS’s holdings. However, the dollar index (DXY) posted a short-term rebound of 0.36% on September 9, creating temporary headwinds for the ETF as investors recalibrated positions amid mixed signals.

Geopolitical tensions and industrial demand also weigh on the outlook. Structural shifts in global trade policies and energy transitions are reshaping commodity flows, with silver’s role in renewable technologies and electronics amplifying its strategic value. Meanwhile, Trump-era tariffs on Russia and India have introduced uncertainty into energy markets, indirectly influencing industrial demand for silver. These factors highlight the dual pressures of supply constraints and evolving end-use sectors.

The performance of gold, a close correlate to silver, further contextualizes the move. Gold prices surged past $3,600 in late August 2025, buoyed by central bank purchases and rate-cut expectations. Analysts suggest that silver may follow a similar trajectory if the Fed continues easing policy, though its smaller market size and industrial applications make it more volatile. December silver futures recently traded at $41.535 per ounce, signaling cautious optimism among traders.

Investor behavior and market psychology remain pivotal. Sharp equity swings, such as a 20.8% drop in CoreWeave, underscore shifting risk appetites, while record highs in indices like the S&P 500 reflect broader optimism about rate cuts. These dynamics influence capital flows into alternative assets like PHYS, which benefits from a weaker dollar and inflationary hedges. However, short-term volatility persists as market participants navigate conflicting signals from inflation data, dollar strength, and geopolitical risks.