Silver traded near $86.50 on Monday, up 2.35% on the day, as demand increased for safe-haven assets amid US political and trade uncertainty.
The US Supreme Court ruled that Donald Trump exceeded his authority by using the International Emergency Economic Powers Act to impose “reciprocal” tariffs, finding them illegal. Trump criticised the ruling and announced a temporary 15% global tariff on imports, with the possibility of further measures.
The US Dollar Index (DXY) fell 0.35% to about 97.45. A weaker US Dollar can support Silver prices because the metal is priced in dollars.
Markets also expect monetary easing from the Federal Reserve in coming months, despite elevated inflation data. Rate-cut expectations can lift demand for non-yielding assets such as Silver.
Tensions in the Middle East added to risk aversion. The Wall Street Journal reported that the US President is considering a limited military strike on Iran to influence talks on Iran’s nuclear programme.
Given the current uncertainty and silver’s sharp move to $86.50, we see increased volatility as a key trading opportunity in the coming weeks. The CBOE Volatility Index (VIX) has already jumped above 28, reflecting widespread market anxiety over the new 15% global tariff. This environment is ideal for options strategies, such as buying calls to speculate on further upside or using spreads to manage risk.
The expectation of monetary easing from the Federal Reserve is a significant tailwind for precious metals. The CME FedWatch Tool now indicates a 75% probability of a rate cut at the March meeting, a stark change from the hawkish stance we saw for much of 2025. Lower interest rates decrease the opportunity cost of holding non-yielding assets like silver, making it more attractive.
A weaker US dollar, now trading near 97.45, provides direct support for silver prices. This slide is amplified by geopolitical risks, with Brent crude prices recently spiking over 6% to $95 a barrel on news of potential military action against Iran. We expect this dynamic to continue, making long silver positions against the dollar a compelling trade.
Looking at relative value, we note that the gold-to-silver ratio has compressed significantly from the highs above 85 we observed in 2025. However, at its current level near 70, it remains above the long-term historical average, suggesting silver may have more room to catch up to gold. This implies that silver could outperform gold if the precious metals rally continues.
We must also monitor the impact of tariffs on silver’s industrial demand, which accounts for over half of its consumption. The latest global manufacturing PMI data for February showed a slight contraction, hinting that a trade slowdown could create headwinds. Any further weakening in industrial activity could temper the rally driven by safe-haven flows.
