HG MARKETS:

Silver (XAG/USD) is holding firm on Friday, trading around $50.70, up 3.20% for the day and hovering near Thursday’s all-time high of $51.24. The precious metal continues to benefit from robust safe-haven demand, mounting supply constraints, and growing expectations of U.S. monetary easing.

The recent surge is largely driven by limited availability of Silver in London, as concerns over potential U.S. tariffs have sparked a rush to ship Silver across the Atlantic. The analysts also note that Silver Exchange Traded Funds (ETFs) have recorded inflows exceeding 620,000 ounces, marking a third consecutive session of increases and pushing total holdings to 822.6 million ounces.

Adding to the bullish sentiment, the Federal Reserve’s (Fed) latest meeting minutes signaled a growing consensus among policymakers for two additional rate cuts by year-end, reflecting increasing caution amid a softening labor market and heightened fiscal tensions in Washington. Lower interest rates typically reduce the opportunity cost of holding non-yielding assets like Silver, thereby enhancing its investment appeal.

Meanwhile, the ongoing U.S. government shutdown, now entering its second week, continues to undermine investor confidence. The budget deadlock in Congress has not only delayed several key economic releases  including the September Nonfarm Payrolls (NFP) report — but has also raised concerns about the pace of economic recovery. This uncertainty has further strengthened expectations of additional monetary support from the Fed in the coming months.

The U.S. Dollar Index (DXY) has eased below 99.50, reflecting a modest decline in the Greenback as traders price in dovish policy expectations. A weaker dollar typically supports commodity prices by making them more affordable for non-U.S. investors, providing an additional tailwind for Silver.

On the supply side, the Silver Institute projects a fifth consecutive annual supply deficit in 2025, underscoring the structural tightness in the global bullion market. Industrial demand, particularly from sectors such as solar energy, electronics, and electric vehicles, continues to rise — amplifying the pressure on limited physical supply.

Looking ahead, analysts expect Silver’s bullish momentum to remain intact in the near term, as a combination of monetary easing prospects, fiscal uncertainty, and structural supply deficits create a supportive environment for higher prices. However, any unexpected strength in the U.S. Dollar or a resolution to the fiscal standoff could temporarily slow the rally.