Silver breaks through historical highs: geopolitical risks intensify, driving up safe-haven demand

Asian trading hours bring news that silver has emerged with a strong momentum. According to market data, XAG/USD reached a near 69.00 USD all-time high on Monday, with a daily increase of 2.5%, setting a record. This strong rally is driven by renewed tensions in the Middle East.

Geopolitical Conflict Reignites, Investors’ Safe-Haven Sentiment Warms

The confrontation between Israel and Iran has once again become a global focus. According to NBC News, Israeli officials are deeply alert to Iran’s military intentions—Iran is accelerating its ballistic missile program and rebuilding nuclear facilities that were damaged earlier this year by Israeli military strikes. These actions have prompted Israel to consider further military options.

The immediate reaction to the escalating situation is a shift in capital flows. When geopolitical risks rise, investors tend to move away from high-risk assets and toward defensive investments like silver. Due to its rarity and industrial uses, silver has long been regarded as a hedge against uncertainty, and this performance reflects that logic.

Fed Policy Expectations Unchanged, Inflation Data Difficult to Shift January Outlook

Another factor supporting silver’s strength comes from monetary policy. The market remains calm about the Fed’s January policy meeting rate cut expectations. Although recent inflation data shows signs of improvement, it is not yet enough to change market expectations of holding rates steady for the month.

The US Consumer Price Index (CPI) for November was released on Thursday. Overall inflation slowed to 2.7% year-over-year, a significant decline from 3% in October. Economists previously forecasted around 3.1%, so the actual figure exceeded expectations. After removing volatile food and energy prices, core CPI fell from the expected 3% and previous 3% to 2.6%, indicating that price pressures are gradually easing.

Despite the positive signals from inflation data, the Fed’s tendency to maintain policy stability in the short term remains unchanged. This policy certainty provides a relatively stable trading environment for commodities like silver and supports demand for safe-haven assets.

USD Trends and Silver Interaction

Silver prices often move inversely to the US dollar. Under the dual influence of rising safe-haven demand due to geopolitical risks and the clear outlook for Fed policy, silver’s attractiveness is further highlighted, making it an important risk hedge in investment portfolios.