Silver is attracting buyers due to rising geopolitical tensions. It’s currently trading around $94.80, close to its all-time high of $95.89. US President Donald Trump’s interest in Greenland and talks of new tariffs on the European Union are raising concerns about economic growth. The European Parliament plans to announce the suspension of a US trade deal, which may increase demand for safe-haven assets in the short term.

Speculation on Federal Reserve and Labor Market

The speculation about a US Federal Reserve rate cut is now being postponed as signs show the US labor market is improving. The next rate cut is anticipated by June, with interest rates likely to stay high for a longer period. Silver is a popular investment because it acts as a store of value and a hedge against inflation. Prices are influenced by geopolitical issues, interest rates, the strength of the US Dollar, and investment demand. Industrial demand, especially from the electronics and solar energy sectors, also affects silver prices. Economic activity in the US, China, and India contributes to price changes. Silver often follows the price trends of gold since both are viewed as safe-haven investments. The Gold/Silver ratio helps assess the relative value of silver compared to gold; a high ratio may suggest that silver is undervalued.

Impact of US-EU Trade Disputes on Silver

Silver is holding close to its all-time high of $95, largely due to ongoing trade disputes between the US and the EU. Notably, transatlantic trade volumes fell by 5% in the last quarter of 2025, adding to the current uncertainty. This situation indicates that traders should monitor safe-haven flows into precious metals. That said, the outlook for interest rates poses a challenge for silver prices. Core inflation in December 2025 was stronger than expected at 3.1%, causing expectations for a Federal Reserve rate cut to be delayed. This “higher for longer” interest rate scenario could limit silver’s price gains, making it costly to hold an asset with no yield. However, strong fundamentals from industrial use provide important support. Global solar panel installations grew a record 25% year-over-year in 2025, and this trend is expected to continue. Such robust demand helps establish a solid price floor, meaning any significant price drops might be brief. Historically, silver has followed gold’s lead, but the Gold/Silver ratio has now decreased to a low of around 55, signaling silver’s unique industrial strength. With silver prices reaching new highs, implied volatility in the options market is quite high. This makes income-generating strategies like selling covered calls or credit spreads especially attractive while establishing defined risk. Create your live VT Markets account and start trading now.

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