• Silver price receives support from the safe-haven flows amid escalating Middle-East tensions.
• Non-yielding Silver could be negatively impacted by prolonged high rates, as the diminishing likelihood of a Fed rate cut reduces its appeal.
• A decline in China’s manufacturing activity might have restrained the positive impact of fiscal and monetary stimulus on Silver demand.

Silver price (XAG/USD) extends its gains for the second consecutive day, trading around $31.50 per troy ounce during the European hours on Wednesday. The upside of the Silver prices is attributed to the safe-haven flows amid escalating geopolitical tensions in the Middle East.

Iran launched over 200 ballistic missiles at Israel on Tuesday, shortly after the US had warned that a strike was imminent. The Israel Defense Forces reported that several of the missiles were intercepted, while reports indicated that one person was killed in the West Bank, according to Bloomberg.

Israeli Prime Minister Benjamin Netanyahu vowed to retaliate against Iran following a missile attack on Tuesday. In response, Tehran warned that any counterstrike would lead to "vast destruction," raising concerns about the potential for a broader conflict.

On Tuesday, the weaker-than-expected ISM Manufacturing PMI made room for the US Federal Reserve (Fed) to continue lowering rates. The index came at 47.2 for September, matching the reading with August's print but came in below the market expectation of 47.5. However, Fed Chair Jerome Powell said on Monday the central bank is not in a hurry and will lower its benchmark rate gradually ‘over time.’

The CME FedWatch Tool indicates that markets are assigning a 62.7% probability to a 25 basis point rate cut by the Federal Reserve in November, while the likelihood of a 50-basis-point cut is 37.3%, down from 57.4% a week ago. Prolonged higher interest rates keep the opportunity cost higher of holding non-yielding assets like Silver, making it less appealing to investors who seek more attractive, yield-bearing alternatives.