Silver rises on safe-haven demand driven by US-Venezuela tensions, Fed outlook

Silver trades higher on Tuesday, supported by a strong pickup in safe-haven demand.
Geopolitical tensions between the United States and Venezuela underpin the appeal of precious metals.
Expectations of Federal Reserve rate cuts limit support for the US Dollar.

Ghiles Guezout FXStreet

Silver (XAG/USD) trades around $78.40 on Tuesday at the time of writing, up 2.90% on the day, extending a streak of four consecutive days of gains. The white metal benefits from a supportive macroeconomic backdrop, dominated by rising risk aversion and persistent expectations of monetary easing in the United States (US).

Silver’s upside momentum is primarily fueled by renewed safe-haven flows amid heightened geopolitical tensions. The arrest of Venezuelan President Nicolás Maduro by US authorities and his transfer to New York to face narcotics-related charges add a new source of uncertainty to global financial markets. Statements from US President Donald Trump, who suggested the possibility of further military action if Washington’s demands are not met by Venezuela’s interim authorities, have reinforced this cautious environment and boosted demand for precious metals.

Silver is also supported by expectations of lower interest rates in the United States. Financial markets are currently pricing in two 25-basis-point rate cuts by the Federal Reserve (Fed) in 2026, according to the CME FedWatch tool. A lower interest-rate environment tends to reduce the opportunity cost of holding non-yielding assets, which is structurally supportive for Silver. At the same time, the recent weakness of the US Dollar (USD) has helped limit downside pressure on dollar-denominated commodities.

Investors remain focused on upcoming US macroeconomic releases, particularly labor market data. The December Nonfarm Payrolls (NFP) report, due on Friday, could influence expectations for Fed policy. A stronger-than-expected labor market outcome could support the US Dollar and cap Silver’s upside in the near term. Conversely, weaker data would reinforce the case for monetary easing and could extend the white metal’s bullish momentum.

Silver FAQs

Why do people invest in Silver?

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.

Which factors influence Silver prices?

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.

How does industrial demand affect Silver 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.

How do Silver prices react to Gold’s moves?

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.

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