Silver hits record highs as US-China tensions, Fed rate cut bets fuel demand

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Silver reaches record highs above $52 amid escalating US-China trade tensions
Safe-haven demand remains firm as US-China trade frictions and the US government shutdown intensify market uncertainty.
Expectations of further Fed rate cuts and falling US Treasury yields continue to support the precious metal.

Silver (XAG/USD) surges to unprecedented levels on Monday, extending its rally for a ninth consecutive week. The metal trades around $51.55 at the time of writing, up over 3% on the day, after reaching a new all-time high at $52.07 earlier in the day. The renewed appetite for safe-haven assets is driven by mounting fears of a global trade shock following US President Donald Trump’s announcement of 100% tariffs on all Chinese imports from November 1, a move that sparked broad risk aversion across financial markets.

The tensions escalated after China unveiled new export restrictions on rare earth elements, raising concerns about potential disruptions to critical global supply chains. While weekend remarks from both Washington and Beijing suggested the possibility of renewed dialogue, investors remain cautious. According to US Treasury Secretary Scott Bessent, both leaders are still expected to meet later this month, though the tone of negotiations remains uncertain.

Meanwhile, the prolonged US government shutdown, now entering its third week, is deepening the sense of instability. Federal agencies remain closed, and thousands of employees have been placed on unpaid leave as the Senate postpones any vote until after the Columbus Day holiday. This fiscal paralysis reinforces demand for safe-haven assets such as Silver.

Expectations of further monetary easing by the Federal Reserve (Fed) are also boosting precious metals. Markets are currently pricing in a near 95% chance of a rate cut at the Fed’s October meeting and an additional reduction in December, according to the CME FedWatch tool. Lower interest rates tend to weaken the US Dollar (USD) and US Treasury yields, thereby increasing the appeal of non-yielding assets such as Silver.

Beyond monetary policy, geopolitical risks continue to underpin the Silver rally. The persistent Russia-Ukraine conflict, combined with threats of new sanctions and potential missile deliveries from the United States to Kyiv, maintains global investors’ appetite for safety. In this environment, Silver, both an industrial and a precious metal, benefits from its dual role as a hedge against political instability and as a proxy for long-term economic uncertainty.

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.