Silver Approaches Record High As Tariff Turmoil, Fed Hopes, Geopolitical Risks Amplify Demand

Samer Hasn

Silver continued to edge higher on Monday, nearing its all-time high once again while hovering near 52.3 dollars per ounce in spot trading.

The metal’s latest rally comes as investors seek refuge amid renewed swings in the U.S.–China trade conflict, front-loading caused by uncertainty about the tariffs on metals, rising expectations for a Federal Reserve rate cut, and escalating geopolitical tensions across several fronts. All of which have reignited safe-haven demand across commodity markets. At the same time, robust industrial demand provides an additional layer of fundamental support that continues to justify silver’s upward momentum.

The rebound in silver is being fueled by a unique blend of uncertainty and opportunity. According to The Wall Street Journal, the renewed tariff turmoil between the U.S. and China has unsettled markets once again, triggering sharp volatility in equities and commodities alike.

Early losses in U.S. indices last week gave way to a partial recovery after Federal Reserve Chair Jerome Powell signaled that further interest rate cuts could be warranted, lifting sentiment and pushing demand for precious metals.

Meanwhile, the CME FedWatch Tool now shows a probability exceeding 94% for a 50-basis-point rate cut before year-end, up sharply from 79% a week ago, suggesting that traders increasingly expect monetary easing to counteract economic headwinds.

At the same time, the trade landscape remains fragile despite occasional conciliatory gestures. The Journal also reported that both Washington and Beijing are engaged in a complex balancing act of publicly signaling de-escalation while privately pressing forward with retaliatory tactics.

President Trump has hinted at softening the threat of 100% tariffs on Chinese goods yet continues to push for firm countermeasures if China does not withdraw its export restrictions on rare-earth minerals.

The persistent uncertainty has spurred investors to hedge against renewed shocks, with precious metals once again emerging as a preferred refuge.

Amid this climate of volatility, silver has gained an additional tailwind from fundamental demand. The Wall Street Journal highlighted in another report that fears of tariffs on industrial metals have triggered widespread stockpiling in warehouses around the world, tightening near-term supply. Shree Kargutkar, senior portfolio manager at Sprott Asset Management, explained that the amount of metal being mined and recycled has fallen short of consumption levels, describing it as a “clear case of supply-demand imbalance.”

The U.S. Geological Survey’s proposal to add silver to its Critical Minerals List, which is a move that would classify it as strategically essential, has also encouraged speculative hoarding as traders seek to front-run potential trade disruptions.

Beyond its monetary appeal, silver’s industrial role is increasingly vital. Market research firm Rho Motion reported that global sales of fully electric and plug-in hybrid vehicles reached a record 2.1 million units in September, up 26% year-on-year, with China accounting for nearly two-thirds of the total. This boom has reinforced silver’s importance, given its extensive use in EV components, including batteries and high-efficiency circuits. However, the sector faces challenges ahead. The Journal noted that governments in the U.S., Canada, the U.K., and the EU are scaling back ambitious EV mandates amid automakers’ mounting losses and infrastructure constraints. This shift could temper the pace of long-term industrial demand, even if short-term consumption remains elevated.

Meanwhile, geopolitical risks are once again amplifying silver’s safe-haven allure. The Financial Times reported earlier that Washington is considering providing long-range Tomahawk missiles to Ukraine, a move that would mark a significant escalation in its standoff with Moscow and potentially endanger energy infrastructure across Russia.

At the same time, tensions are mounting in the Middle East, where renewed fears of confrontation between Iran and Israel are resurfacing.

Adding to the global unease, the United States has initiated its largest military buildup in the Caribbean in over three decades, deploying advanced weaponry and about 10,000 troops. Some analysts interpret this as preparation for possible operations against the Venezuelan regime of Nicolás Maduro, but this requires even more larger buildup.

Hasn is Senior Market Analyst at XS.com