The price of silver climbed above $60 (£45.10) an ounce for the first time on Tuesday, driven by expectations of a US Federal Reserve interest rate cut and strong demand from technology manufacturers that has outpaced available supply.
Investor Positioning Ahead of Expected Rate Cut
Silver’s jump occurred as markets prepared for what is widely expected to be a quarter-percentage-point rate cut by the US central bank on Wednesday. Precious metals typically attract more investment when interest rates fall and the US dollar weakens, as holding cash or buying short-term bonds becomes less appealing. Yeow Hwee Chua of Nanyang Technological University said lower rates naturally shift demand toward assets viewed as stores of value, including silver. Gold also rose this week, extending gains made earlier in the year amid concerns about US tariffs and global economic conditions.
The rise in silver is partly seen as a spillover from the rally in gold, which has gained more than 50% this year and exceeded $4,000 an ounce for the first time. OCBC analyst Christopher Wong said investors often look for more affordable alternatives when gold prices accelerate. Platinum and palladium have also recorded gains this year.
Growing Industrial Use Outpacing Supply
Analysts say silver’s value has been driven not only by investment trends but also by strong industrial demand. Silver’s role as a conductive material for products such as electric vehicles (EVs) and solar panels has intensified pressure on supply. Kosmas Marinakis of Singapore Management University noted that silver is both an investment asset and a physical resource, and manufacturers increasingly require it for production. Rising EV sales are expected to increase the need for advanced batteries, which use even more silver, further boosting industrial demand.
Supply, however, has been slow to respond. Most global silver output is produced as a by-product from mines that primarily extract other metals, including copper, lead and gold. That structure limits the industry’s ability to rapidly increase production in response to soaring demand, contributing to the metal’s sharp rise. Silver’s value has more than doubled this year, outperforming other precious metals, including gold.
Trade Policy Fears and Resulting Stockpiling
Concerns that the US government could impose tariffs on silver under President Donald Trump’s trade policies have added further upward pressure on prices. Fears of potential tariffs have prompted stockpiling in the US, leading to shortages in other regions. The US imports around two-thirds of its silver supply, which is used across manufacturing, jewellery production and investment markets.
Manufacturers concerned about shortages have been rushing to secure material, a trend that has helped elevate prices on global markets. Marinakis said he expects silver prices to remain high in the coming months.
Featured image credits: Flickr
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