Analysts say silver’s advance could continue, but only if the Federal Reserve follows through with the rate cut markets have already priced in. The metal’s rise to roughly $60.79 an ounce reflects an 87% implied probability of a quarter-point reduction, and several commodity specialists argue that extended easing would help keep the metal supported. Others warn the rally may lose steam if policymakers hint at a slower pace of cuts, leaving silver exposed after such an aggressive run.

This divide sets the tone heading into the Fed meeting: is silver’s breakout built on lasting fundamentals or on crowded expectations? Persistent supply tightness and tariff anxieties lend weight to the bullish argument, while the liquidity vacuum seen in October underscores how quickly conditions can deteriorate. Analysts broadly agree that this week’s policy signal will determine whether silver pushes higher or begins to stall beneath recent peaks.

What’s driving silver’s rise?

The dominant force behind silver’s ascent is the widespread assumption that the Federal Reserve will reinforce its easing cycle. Market pricing suggests an 87% chance of a quarter-point cut, placing the target rate between 3.5% and 3.75%, according to CME’s FedWatch tool.

Alt text: A bar chart titled ‘Target Rate Probabilities for 10 Dec 2025 Fed Meeting’. It shows two probability bars for expected Federal Reserve target rates.

A weaker US dollar - down 8.5% this year - has improved the appeal of non-yielding precious metals. Rhona O’Connell of StoneX remarked that traders “were definitely looking for cuts”, and that anticipation alone helped pull silver higher even before the meeting concluded.

However, policy expectations are only one part of the story. The physical silver market has been strained for months. London inventories tightened so severely in October that one investment chief described conditions as “entirely unprecedented”, noting an absence of liquidity as Indian demand and ETF inflows absorbed available metal.

Although stocks in London have partly recovered to about 202 million free-floating ounces, the rebound remains uneven. Chinese inventories are still hovering at decade-low levels, while US Comex warehouses hold an unusually large 456 million ounces following silver’s addition to the country’s critical-minerals list.

Why it matters

Analysts suggest this rally reflects more than speculative fervour; it exposes long-term fragilities in the market. Silver is primarily mined as a by-product, meaning producers cannot meaningfully ramp output in response to higher prices. 

Helen Amos at BMO said “regional tightness” will likely persist, citing structural deficits that have been building for half a decade. The market’s shortfalls are no longer episodic - they are embedded.

The contrast with gold reinforces how unusual silver’s dynamics have become. Gold has climbed roughly 60% this year, driven by robust central-bank buying and healthy ETF flows. Yet BMI warns that a pause in rate cuts could pull it below $4,000. Silver, by comparison, offers greater upside potential but carries significantly more volatility. Goldman Sachs has warned that silver faces “more downside price risk” due to its thinner liquidity profile and heavier industrial dependence.

Impact on markets and industry

Manufacturers are already wrestling with the consequences of silver’s wild swings. Rising demand from solar and electronics producers means each price spike has a direct effect on cost planning and procurement. The disconnect between long-term manufacturing commitments and short-term market instability is forcing some firms to hedge more actively, while others are absorbing higher costs until pricing stabilises.

Financial markets have also been adjusting. The October freeze in the over-the-counter market - when participants struggled to transact due to a lack of liquidity - served as a warning of how quickly silver can become disorderly. TD Securities strategist Dan Ghali attributed the episode to strained arbitrage conditions, intensified by tariff concerns and uneven stock distribution. The experience sharpened traders’ focus on liquidity risk and increased intraday sensitivity to news flow.

Retail interest is also shaping price behaviour. In North America, where silver is often referred to as the “poor man’s gold,” retail flows can amplify momentum in either direction. That dynamic raises the stakes heading into the Fed decision, as sentiment-driven moves could exaggerate the market’s response to any policy shift.

Expert outlook

Opinions among analysts remain split. Some believe silver’s rally could extend if the physical market stays tight and the Fed maintains a clear easing path. Standard Chartered’s Suki Cooper takes this view, though she emphasises that heightened volatility will persist, especially with traders monitoring the upcoming Section 232 review for potential tariff changes.

Forecasts range widely: one camp sees scope for silver to push significantly beyond $61 if the dollar weakens further, while another warns that even a mildly hawkish signal could prompt an abrupt unwinding of leveraged positions. The next moves will depend on three developments: the Fed’s tone on future cuts, the release of the US critical-minerals review, and updated inventory readings from China and London. Each of these could reshape sentiment in short order.

Key takeaway

Silver’s move above $60 stems from a potent combination of monetary easing expectations, tight supply, and tariff-related uncertainty. The rally reflects genuine pressure in the physical market, but also a structure prone to sudden liquidity gaps. With the Federal Reserve set to deliver its latest decision, the market is approaching a decisive moment. Whether silver extends its breakout or begins to cool will depend on policy guidance, regulatory developments, and the rate at which inventories rebuild.

Silver technical insights

At the time of writing, Silver (XAG/USD) is trading near $61.32, extending an impressive upward run and remaining well above the key $57.00 support zone. A retreat toward this level could trigger a wave of long liquidation, while a move closer to $49.40 or $47.00 would indicate a far broader corrective phase. For now, the metal stays firmly bullish, holding near the top of its Bollinger Band range as momentum remains elevated.

Recent price action continues to form higher highs and higher lows, signalling a strong bullish structure. Even so, candlesticks near current peaks are beginning to show small signs of hesitation, suggesting the market may soon test the strength of buying interest after such a rapid climb. With volatility high and daily ranges widening, many traders are relying on tools like the Deriv Trading Calculator to refine position sizing and risk assessment before entering the market.

The RSI, now around 76, sits deep within overbought territory - evidence of strong demand but also a warning that the market might be overextended in the short term. While the broader trend remains intact, a brief consolidation would not be surprising and could help reset momentum indicators. A controlled pullback would likely attract trend followers monitoring XAG/USD on Deriv MT5.