Silver (XAG/USD) continues to attract strong buying interest, climbing to around $74.10 per troy ounce during early European trading on Friday. The grey metal remains firmly supported after an exceptional 2025 performance, during which prices surged nearly 148%, breaking multiple long-term technical levels. The rally has been underpinned by Silver’s designation as a critical mineral in the US, persistently tight supply conditions, low global stockpiles, and rising demand from both industrial users and investors.
Fed rate cut bets support non-yielding metals
Silver’s appeal has been reinforced by increasingly dovish expectations surrounding US monetary policy. As a non-interest-bearing asset, Silver tends to benefit from lower interest rate environments, which reduce the opportunity cost of holding the metal. Market pricing suggests that traders are expecting the Federal Reserve (Fed) to deliver two additional interest rate cuts in 2026, a backdrop that continues to favor precious metals.
Further support comes from a softer US Dollar (USD), which makes dollar-denominated commodities such as Silver more affordable for non-US buyers. Sentiment around the Greenback has been weighed down by speculation that US President Donald Trump will soon nominate a new Fed chair to replace Jerome Powell when his term ends in May, a development that could tilt policy expectations further toward easing.
Geopolitical risks and China demand tighten supply
Safe-haven demand is also playing a key role in Silver’s advance. Heightened geopolitical tensions, including renewed exchanges of accusations between Russia and Ukraine over civilian attacks on New Year’s Day, alongside persistent friction between the US and Venezuela, have kept investors positioned defensively across precious metals.
At the same time, Silver prices are being lifted by a sharp increase in speculative demand from China. Premiums on the Shanghai Futures Exchange have surged to record highs, signaling strong domestic appetite and contributing to tighter global supply chains. These conditions mirror earlier inventory squeezes seen in major storage hubs in London and New York, reinforcing the structural bullish case for Silver in the current environment.
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