Silver has risen by 2.40%, trading around $52.40 per troy ounce. This surge follows global tensions between the US and China, and expectations of further monetary easing by the US Federal Reserve. The price nearly reached its record high of $53.77.

The US-China trade conflict has intensified, with US President Donald Trump considering ending certain trade connections with China, which could impact global growth. The International Monetary Fund cautioned that ongoing tariff uncertainty could affect global trade flows and growth.

The current US government shutdown adds uncertainty, increasing demand for Silver and Gold. This lack of key economic data has led to anticipation that the Federal Reserve will ease its policies. The CME FedWatch tool predicts a 97% chance of a 25-basis-point rate cut in October and another in December.

Potential US military aid to Ukraine and the tension with Russia also contribute to Silver’s appeal as a hedge. Silver is a popular choice for diversifying investment portfolios due to its intrinsic value and hedge potential during high inflation. It is also influenced by industrial demand and geopolitical factors.

Silver often follows Gold prices, with the Gold/Silver ratio indicating relative value. The use of Silver in industries, particularly electronics and solar energy, affects its price, with economic trends in major economies further influencing demand.

We are seeing a familiar pattern emerge in the silver market, reminiscent of past rallies driven by global uncertainty. With silver currently trading around $35 an ounce, the renewed tensions between the US and China over technology tariffs are stoking safe-haven demand. This environment mirrors the conditions we saw years ago when geopolitical friction and concerns over economic growth pushed investors toward precious metals.

The market is now heavily focused on the Federal Reserve’s next move, much like it was during previous easing cycles. With recent weak manufacturing data and a cooling labor market, the CME FedWatch Tool shows markets are pricing in an 85% probability of a rate cut by the first quarter of 2026. This growing expectation of lower interest rates makes holding a non-yielding asset like silver more attractive.

Looking at historical data, the Gold/Silver ratio provides a compelling case for silver’s relative value. The ratio currently stands at a high of 82:1, meaning it takes 82 ounces of silver to buy one ounce of gold, which is well above the 20-year average. We’ve seen in the past that when this ratio is elevated, silver often outperforms gold when precious metals begin to rally.

Furthermore, silver’s fundamental picture is strengthened by robust industrial demand, a factor that continues to grow in importance. Demand from the solar panel and electric vehicle sectors is set to hit a record 690 million ounces in 2025, according to projections from the Metals Focus consultancy. This provides a strong underlying support for prices, independent of investment flows.

Given this backdrop of expected monetary easing and strong industrial use, derivative traders should consider positioning for upside in the coming weeks. Bullish strategies, such as buying call options with strike prices around $38 for December 2025, could offer a leveraged way to profit from a potential breakout. This approach allows traders to define their risk while capturing significant gains if silver continues its upward trend toward year-end.