Silver trades near all-time high amid geopolitical tensions, safe-haven demand
- Silver rises and trades around $95.50 on Tuesday, near its all-time high.
- Geopolitical tensions between the US and Europe fuel safe-haven demand.
- Concerns over central bank independence and US debt support precious metals.
Silver (XAG/USD) trades around $95.50 on Tuesday at the time of writing, up 1.20% on the day, after posting a fresh all-time high at $95.89 earlier in the day. The white metal benefits from an environment marked by heightened risk aversion and renewed demand for safe-haven assets, amid escalating geopolitical tensions.
Silver’s rally is part of a broader move across precious metals, as rising political frictions between the United States (US) and Europe revive fears of a transatlantic trade conflict and add to uncertainty across financial markets, increasing the appeal of safe havens.
ING notes that Silver’s upside momentum remains impressive year to date, with gains significantly outpacing those of Gold (XAU/USD), reflecting a mix of defensive inflows and speculative positioning. Investors are seeking protection against risks linked to US trade policy, the surge in US debt, and an increasingly unpredictable political environment.
Repeated attacks by the US administration on the Federal Reserve (Fed) are also intensifying concerns about central bank independence. This backdrop is reinforcing what analysts describe as the debasement trade, with investors favoring Gold and Silver over currencies and government bonds. Persistent pressure on the US Dollar (USD) mechanically boosts the appeal of dollar-denominated precious metals.
Beyond tensions between Washington and its European partners, ongoing conflicts, particularly in Eastern Europe and the Middle East, keep geopolitical risk elevated. In this context, Silver continues to enjoy strong fundamental support, driven by the search for protection against global macroeconomic and financial uncertainty.
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.
