Silver holds near all-time highs amid safe-haven demand, tightening supply

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Silver (XAG/USD) is holding firm on Friday, trading around $50.70 at the time of writing, up 3.20% for the day, near Thursday’s all-time high of $51.24. The grey metal remains driven by persistent safe-haven demand and mounting evidence of supply tightness in global bullion markets.

Silver is holding close to Thursday's record high of $51.24.
The US government shutdown and expectations of Fed rate cuts sustain demand for safe-haven assets.
Supply shortages in the London bullion market and robust inflows into Silver ETFs continue to support prices.

According to ING analysts Ewa Manthey and Warren Patterson, “a lack of readily available Silver in London is driving prices up, largely due to fears of potential US tariffs that have triggered a rush to ship Silver across the Atlantic.” The bank highlights that total known holdings in Silver Exchange Traded Funds (ETFs) have risen for a third consecutive session, with inflows of more than 620 thousand ounces, bringing total holdings to 822.6 million ounces.

The rally is further supported by expectations of continued monetary easing from the US Federal Reserve (Fed). Minutes from the September Federal Open Market Committee (FOMC) meeting released on Wednesday revealed growing support among policymakers for two additional rate cuts by year-end, amid signs of a weakening labor market and a deepening fiscal standoff in Washington.

The ongoing US government shutdown, now in its second week, continues to weigh on investor confidence. The lack of progress in Congress to approve funding bills has suspended several key data releases, including the September Nonfarm Payrolls (NFP) report. This paralysis increases the risk of slower growth and reinforces expectations of additional policy support from the Fed.

Against this backdrop, the US Dollar (USD) retreats slightly, with the US Dollar Index (DXY) easing below 99.50 on Friday. The weaker Greenback makes Silver more attractive to foreign investors, adding to the metal’s bullish momentum.

In addition to monetary and political factors, the Silver Institute projects a fifth consecutive annual supply deficit in 2025, underlining the metal’s robust structural fundamentals.

The combination of monetary easing prospects by the Fed, fiscal uncertainty in the US, and tightening supply conditions suggests that Silver’s bullish momentum may persist in the near term, provided that the Fed maintains its dovish stance and the US fiscal impasse remains unresolved.

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.

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