Silver traded near $86.50 on Monday, up 2.35% on the day. Demand for safe-haven assets rose as US politics and trade policy became more uncertain.
The US Supreme Court ruled that Donald Trump went beyond his authority when he used the International Emergency Economic Powers Act to impose “reciprocal” tariffs. The court found the tariffs illegal. Trump criticised the decision and announced a temporary 15% global tariff on imports, with the option to add more measures later.
The US Dollar Index (DXY) fell 0.35% to around 97.45. A weaker US Dollar often supports Silver prices because Silver is priced in dollars.
Markets also expect the Federal Reserve to cut rates in the coming months, even though inflation remains high. Rate-cut expectations can boost demand for non-yielding assets like Silver.
Tensions in the Middle East also increased risk aversion. The Wall Street Journal reported that the US President is considering a limited military strike on Iran to influence talks over Iran’s nuclear programme.
Given the uncertainty and Silver’s sharp move to $86.50, we expect higher volatility to create trading opportunities in the coming weeks. The CBOE Volatility Index (VIX) has already jumped above 28, showing broad market anxiety about the new 15% global tariff. This backdrop can suit options strategies, such as buying calls to target more upside or using spreads to limit risk.
Expected Fed easing remains a major support for precious metals. The CME FedWatch Tool now shows a 75% chance of a rate cut at the March meeting. This is a major shift from the more hawkish tone seen through much of 2025. Lower interest rates reduce the cost of holding non-yielding assets like Silver, which can make Silver more attractive.
A weaker US dollar near 97.45 also offers direct support for Silver. This move is being reinforced by geopolitical risk. Brent crude recently jumped more than 6% to $95 a barrel on reports of possible military action against Iran. We expect these forces to stay in place, making long Silver versus the Dollar an appealing trade.
On relative value, the gold-to-silver ratio has dropped from the 2025 highs above 85. Even so, at about 70 it is still above the long-term average. That suggests Silver may have more room to catch up with Gold. If the rally in precious metals continues, Silver could outperform Gold.
We also need to watch how tariffs affect Silver’s industrial demand, which accounts for more than half of total consumption. The latest global manufacturing PMI for February showed a slight contraction. That points to a possible trade slowdown, which could weigh on demand. If industrial activity weakens further, it could limit the rally that is currently being driven by safe-haven buying.
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