Silver has reached above $60 per ounce, setting a new record, amid expectations of Federal Reserve rate cuts and reduced supply availability. Silver’s historical better performance compared to gold during easing cycles contributed to this rise.
Silver prices surpassed $60 per ounce, spurred by anticipated interest rate cuts by the Federal Reserve and supply concerns. The metal tends to benefit from lower real yields, boosting both investor interest and industrial use over gold.
This year, silver prices have increased by approximately 110%, overtaking gold’s gains. The market is reacting to potential future U.S. tariffs on silver, following its designation as a critical mineral by the Geological Survey.
Mined silver output has fallen by about 3% this year due to lower ore grades and a lack of new projects. Looking towards 2026, silver prices are expected to stay robust, driven by strong industrial demand, limited supply growth, and an improved macroeconomic setting.
We’ve seen silver break through the $60 per ounce barrier, a significant new high driven by tight supply and expectations of Federal Reserve rate cuts. This bullish momentum has been building all year, with silver now up over 110% since January 2025. Derivative traders should recognize this powerful upward trend.
Given the upcoming FOMC meeting next week, positioning for further upside with call options seems prudent. The CME FedWatch Tool shows markets are pricing in over a 90% chance of an initial rate cut, which historically boosts silver more than gold. We saw a similar pattern during the 2019 easing cycle, where silver’s rally accelerated after the Fed’s first cut.
However, with such a massive gain year-to-date, we must be cautious of a potential short-term pullback. The CBOE Silver Volatility Index (VXSLV) has climbed to multi-year highs, making long call options expensive. Traders could instead consider selling out-of-the-money put options to collect elevated premiums, betting that any dip will be limited.
We are also watching the supply fundamentals, which point to continued price support into 2026. Recent Q3 2025 production reports from major miners confirmed the trend of declining ore grades, and the U.S. critical mineral designation raises the possibility of future tariffs. This structural deficit suggests that holding longer-dated bullish positions could be a rewarding strategy.
