Silver extends rally to record high above $71 on safe-haven demand, Fed easing bets
- Silver extends its rally for a third consecutive day and posts a fresh all-time high at $71.09
- Safe-haven demand remains supported by geopolitical tensions and political uncertainty
- Expectations of prolonged Federal Reserve easing limit the risk of a deeper pullback
Silver (XAG/USD) extends its rally for a third straight day, up 2.80% on Tuesday, and trades close to its historical highs. The white metal prints a new record high at $71.09 and currently holds near this level, highlighting the strength of the bullish momentum despite occasionally volatile market conditions.
Silver is primarily supported by an increasingly tense geopolitical backdrop, which continues to underpin demand for safe-haven assets. Persistent uncertainty surrounding several global flashpoints encourages investors to increase exposure to precious metals, at a time when macroeconomic visibility remains limited.
At the same time, expectations of an accommodative monetary policy stance in the United States (US) provide additional structural support. Markets remain confident that the Federal Reserve (Fed) could continue easing policy in the coming years, despite mixed economic signals. This outlook weighs on real yields and reinforces the appeal of Silver, which offers no yield but retains its role as a store of value in a lower-rate environment.
Recent US macroeconomic data paint a nuanced picture. While growth remains solid, several leading indicators point to a gradual slowdown, particularly in investment and Industrial Production. This combination sustains the view that the Fed has room to support the economy, limiting any sustained recovery in the US Dollar (USD) and favoring precious metals.
Beyond macroeconomic factors, the current move also reflects year-end portfolio repositioning. After already delivering exceptional performance, Silver continues to attract both speculative and long-term inflows, as investors prioritize diversification and protection against tail risks.
Although short-term profit-taking cannot be ruled out after such a sharp advance, the broader fundamental bias remains tilted to the upside. As long as geopolitical tensions persist and expectations of prolonged Fed easing remain firmly anchored, Silver continues to benefit from a supportive environment for elevated prices.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Author
Ghiles Guezout
FXStreet
Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.
