Silver (XAG/USD) continues its bullish momentum on Monday and is trading near $69.05 at the time of writing, up 2.75% on the day, after hitting a new all-time peak at $69.47 earlier in the day. The white metal is benefiting from strong buying after several weeks of steady gains, supported by a macroeconomic and geopolitical backdrop that remains favorable for safe-haven assets.
Silver’s rally is evident in an environment characterized by continued expectations of monetary easing in the United States. Markets continue to price in additional interest rate cuts by the Federal Reserve (Fed) through 2026, with recent data pointing to gradually easing inflationary pressures and a softer US labor market. The low interest rate environment reduces the opportunity cost of holding non-yielding assets, providing structural support for precious metals.
A softer US dollar (USD) is another key driver. A weak dollar makes silver more attractive to foreign investors. The US Dollar Index (DXY), which measures the value of the US currency against a basket of major currencies, is trading around the 98.35 level, down slightly after reaching a one-week high late last week. This decline in the US dollar adds to silver’s bullish momentum, which is already supported by strong investment demand.
On the geopolitical front, tensions remain high and continue to encourage investors to take a cautious stance. Renewed frictions between Iran and Israel have revived concerns about a potential regional escalation, while rising tensions between the United States and Venezuela, particularly over oil exports, are adding to global uncertainty. On the other hand, diplomatic efforts related to the war in Ukraine are progressing slowly, without any decisive progress, which keeps the geopolitical risks at a high level.
As markets approach the end of the year, reduced liquidity may lead to periods of consolidation or moderate profit-taking after the recent rally. However, several US macroeconomic releases scheduled for Tuesday, including the four-week average of ADP employment change, preliminary Q3 GDP report, durable goods orders, industrial production, and consumer confidence, could provide short-term direction for silver.
Overall, as long as accommodative monetary policy expectations, US dollar weakness, and geopolitical uncertainty persist, the fundamental bias for silver remains constructive, despite the risk of a pause after new record highs.
Frequently asked questions about silver
Silver is a precious metal that is widely traded among investors. It has been used historically as a store of value and 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 periods of high inflation. Investors can buy physical silver, in the form of coins or bullion, or trade it through instruments such as exchange-traded funds, which track its price in international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession could cause the price of silver to rise due to its safe-haven status, although to a lesser extent than the price of gold. As a non-yielding asset, silver tends to rise as interest rates fall. Its movements 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, while a weak dollar is likely to push prices higher. Other factors such as investment demand, mining supplies – silver is more plentiful than gold – and recycling rates can also influence prices.
Silver is widely used in industry, especially in sectors such as electronics or solar energy, as it has one of the highest electrical conductivity of all metals – more than copper and gold. A rise in demand can cause prices to rise, while a fall tends to bring them down. Dynamics in the economies of the United States, China and India can also contribute to price fluctuations: for the United States, and especially China, its large industrial sectors use silver in various processes; In India, consumer demand for the precious metal used in jewelery also plays a major role in determining prices.
Silver prices tend to follow gold movements. When gold prices rise, silver usually follows suit, as its status as a safe haven asset is similar. The gold/silver ratio, which shows how many ounces of silver are needed to equal the value of one ounce of gold, may help determine the relative valuation between the two metals. Some investors may consider a high ratio to be an indication that silver is undervalued, or that gold is undervalued. Conversely, a low ratio may indicate that gold is undervalued compared to silver.
