Silver (XAG/USD) continues its spectacular rally at the start of the week, trading around $109.50 at the time of writing on Monday, up 6.90% on the day. The white metal earlier touched a new record high at $110.90, benefiting from an increasingly uncertain macroeconomic environment that favors safe-haven assets.
Risk aversion remains driven by mounting concerns surrounding the United States (US). Repeated trade threats from the US administration, growing risks of a budget shutdown and questions over the independence of the Federal Reserve (Fed) are reviving fears about a deterioration in the economic and institutional framework. In this context, investors are turning to precious metals as a hedge against macroeconomic and financial instability.
Persistent pressure on the US Dollar (USD) is another key pillar supporting Silver. The Greenback remains weighed down by expectations of interest rate cuts and political uncertainty in Washington, making dollar-denominated metals more attractive to foreign buyers and mechanically strengthening demand.
Beyond its safe-haven status, Silver is also benefiting from strong industrial fundamentals. Demand linked to the energy transition, particularly from solar, electrification and grid infrastructure sectors, continues to tighten the physical market, while mine supply growth remains limited.
Expectations surrounding US monetary policy also remain central. Markets believe the Fed is likely to maintain a cautious stance in the near term, while keeping the door open to easing later in the year should the economic slowdown intensify. This outlook for lower real rates continues to support non-yielding assets such as Silver.
Overall, despite an already impressive rise since the start of the year, the current macroeconomic backdrop, characterized by political uncertainty, trade tensions and a weaker US Dollar, continues to argue in favor of sustained demand for Silver, both as a safe-haven asset and as a strategic metal for the global economy.
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.