• Silver posts a sharp advance, registering solid gains at the start of the week.
• Demand for precious metals rises amid escalating geopolitical and political risks.
• Concerns surrounding US monetary policy weaken the USD and support non-yielding metals.

Silver (XAG/USD) trades around $85.40 on Monday at the time of writing, up 7.00% on the day. Silver is holding onto most of its gains and is moving closer to its all-time high of $58.87 set on December 28, against a backdrop of heightened risk aversion and a strong shift toward safe-haven assets.

Silver’s bullish momentum is part of a broader move across the precious metals complex, also reflected in Gold (XAU/USD). Rising geopolitical tensions are driving flows into defensive assets, as investors closely monitor developments in the Middle East, particularly ongoing unrest in Iran and the exchange of threats between Tehran and Washington. These concerns are compounded by growing uncertainty over Arctic security, following discussions in Europe about strengthening the military presence in Greenland, further weighing on global risk sentiment.

The environment of uncertainty is exacerbated by an unprecedented political situation in the United States (US). The launch of a criminal investigation targeting Federal Reserve (Fed) Chair Jerome Powell has undermined confidence in the institution and raised fears of a politicization of monetary policy. This political pressure weakens trust in the central bank’s decision-making framework and weighs on the US Dollar (USD), a factor that typically supports Dollar-denominated precious metals such as Silver.

On the macroeconomic front, the latest US labor market data reinforce expectations of monetary easing. Job creation came in below market expectations, pointing to a gradual slowdown in employment conditions. In this context, markets continue to price in two interest-rate cuts by the Fed this year, even as a policy hold is widely expected at the next meeting in January. The prospect of lower interest rates reduces the opportunity cost of holding non-yielding assets, structurally supporting demand for Silver.

In the near term, investors’ focus turns to upcoming US economic releases, particularly the Consumer Price Index (CPI), Retail Sales, and the Producer Price Index (PPI), as well as speeches from Fed officials. Any confirmation of an economic slowdown or a more dovish stance from the central bank could extend Silver’s upside momentum, already fueled by an especially tense geopolitical and political backdrop.