Silver price (XAG/USD) pulls back sharply toward the $75.00 level during the Asian session on Monday after hitting a fresh all-time high of $84.03 earlier in the day. The white metal surrenders its intraday gains and slips into negative territory as easing geopolitical tensions reduce demand for traditional safe-haven assets.
Peace talk signals pressure silver demand
Sentiment shifted after US President Donald Trump signaled progress in peace negotiations between Russia and Ukraine. Trump and Ukrainian President Volodymyr Zelensky said following a meeting in Florida that a potential agreement to end the conflict may be close, although key issues remain unresolved. These include the extent of Ukrainian territorial concessions and the future of the Zaporizhzhia nuclear power plant, which remains under Russian control, according to reports from the BBC.
Markets typically respond to signs of de-escalation in geopolitical conflicts by rotating away from safe-haven assets, weighing on Silver prices after their recent surge.
Supply risks and Fed rate cut bets keep medium-term outlook constructive
Despite the near-term pullback, the broader outlook for Silver remains supportive. Prices continue to find underlying demand amid reports of tighter supply conditions following China’s decision to impose new export restrictions on Silver starting January 1, 2026. Under the new framework, smaller exporters will be barred from overseas sales, while exports will be limited to large, state-approved firms that meet strict production and financing requirements, raising concerns over global supply availability.
The move has drawn criticism from industry leaders. Tesla CEO Elon Musk publicly criticized Beijing’s decision, highlighting Silver’s critical role across multiple industrial applications. “This is not good. Silver is needed in many industrial processes,” Musk wrote on X, formerly Twitter.
Monetary policy expectations also remain a key tailwind. The CME FedWatch tool shows a 73.3% probability that the Federal Reserve will cut interest rates by at least 50 basis points in 2026. Lower interest rates typically reduce the opportunity cost of holding non-yielding assets such as Silver, supporting prices over the medium term.
However, a degree of policy uncertainty persists. The Fed’s latest dot plot indicates that policymakers expect the federal funds rate to decline to around 3.4% by the end of 2026, suggesting room for no more than one rate cut. This divergence between market expectations and official projections could continue to drive volatility in Silver prices in the months ahead.
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