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Silver hits record as Fed rate cut looms
Silver prices soared to an unprecedented $60 per ounce on Tuesday, driven by expectations of a U.S. Federal Reserve interest rate reduction and robust industrial demand. The precious metal, traded on the spot market for immediate delivery, reached the milestone for the first time.
Gold and broader market trends
Gold, which earlier this year set records amid concerns over U.S. tariffs and global economic uncertainty, also rose this week. Precious metals typically attract investors when interest rates fall and the U.S. dollar weakens, as lower rates reduce the appeal of holding cash or short-term bonds.
The Fed is widely anticipated to cut its benchmark rate by 0.25 percentage points on Wednesday. Yeow Hee Chua, an economist at Nanyang Technological University, noted that such cuts shift investor interest toward assets perceived as safe stores of value, including silver.
Silver's rally fueled by gold spillover and industrial demand
Analysts suggest silver's surge partly reflects a "spillover effect" from gold's gains, as investors seek more affordable alternatives. Gold has climbed over 50% this year, buoyed by substantial purchases from central banks, while platinum and palladium have also risen.
However, silver's outperformance stems from strong industrial demand outpacing supply. Kosmas Marinakis, a researcher at Singapore Management University, highlighted that silver is both an investment asset and a critical industrial material, with manufacturers increasingly relying on it for products like electric vehicles (EVs) and solar panels.
"Silver conducts electricity better than gold or copper, making it indispensable for advanced technologies," Marinakis said.
Supply constraints and trade policy risks
Supply growth for silver remains limited, as most global output comes as a by-product of mining for other metals like lead, copper, or gold. This constraint has contributed to the metal's price surge, alongside fears of potential U.S. tariffs under President Donald Trump's trade policies.
Such concerns have led to silver stockpiling in the U.S., creating shortages elsewhere. The U.S. imports roughly two-thirds of its silver, used in manufacturing, jewelry, and investment. Marinakis warned that manufacturers are scrambling to secure supplies, further driving up global prices.
Outlook: High prices expected to persist
Experts forecast silver prices will remain elevated in the coming months, supported by continued industrial demand-particularly from the EV sector-and ongoing supply challenges. Advanced batteries for electric vehicles are expected to require even more silver, reinforcing the metal's upward trajectory.
