By Giulia Petroni


Silver prices rallied to new highs on Tuesday, powered by confidence that the Federal Reserve will cut interest rates this week and fears of a global supply squeeze.

Futures in New York were up 4.4% to $60.97 a troy ounce after hitting an intraday high of $61.06, while spot prices gained 3.9% to $60.46 an ounce after reaching $60.50. Prices have risen nearly 110% so far this year, outpacing both gold and platinum.

Markets are holding firm in their expectation of a 25 basis-point rate cut on Wednesday amid persistent concerns over labor-market weakness, even though uncertainty lingers over what comes next. Lower interest rates tend to boost the appeal of non-yielding assets that don't pay dividends or interest.

Silver is also getting a boost from worries that the U.S. could target the metal in future tariffs after adding it to the Geological Survey's list of critical minerals last month, driving heavy inflows into the U.S. and tightening supply elsewhere.

Investor demand for precious metals has surged in recent months, partly driven by concerns over rising debt levels in major Western economies and fears of currency devaluation. Gold has climbed 60% this year, surpassing the $4,200 mark.

Silver typically mirrors gold, but its smaller market makes it more volatile and sensitive to dollar moves. The white metal is also much cheaper than gold, attracting investors looking for affordable safe havens, and is widely used in industry-from the manufacture of solar panels to artificial-intelligence semiconductors.

"Silver's strength this year has been underpinned by a combination of factors, including a persistent supply deficit, strong industrial demand thanks to solar-- one of the metal's primary uses--EVs and electronics, and renewed investment flows into silver as a cheaper alternative to gold," said Ewa Manthey, commodity strategist at ING.

The silver market is also set for a fifth straight annual deficit in 2025 as constrained production meets rising industrial and investment demand, according to the Silver Institute, a nonprofit global industry association.

"Silver supply is structurally inelastic, with around 70-80% of global silver output coming as a by-product from mines that primarily produce lead, zinc, copper or gold," Manthey said. "That means that silver supply cannot be scaled up even when prices rise, unless the metals that silver is mined with justify higher production too."

Over the coming months, silver is positioned to benefit from the same forces lifting gold--a softer U.S. dollar, monetary easing and renewed demand for havens amid geopolitical tensions. The metal is also expected to gain from broader electrification, power-grid upgrades and growing use in autos, particularly hybrid and battery-electric vehicles.


Write to Giulia Petroni at giulia.petroni@wsj.com


(END) Dow Jones Newswires

12-09-25 1203ET