Written by: Rania Gule, Senior Market Analyst at XS.com – MENA
Precious metals markets are entering a pivotal phase as 2026 begins, with silver standing out in particular as one of the most debated and closely analyzed assets—not only because of its remarkable price performance, but also due to the convergence of a rare set of monetary, economic, and geopolitical factors at the same time. From my perspective, what is currently unfolding in the silver market cannot be dismissed as a temporary speculative wave; rather, it reflects a deeper structural shift in global demand dynamics, monetary policy expectations, and systemic risks that are increasingly unsettling investors and traders worldwide.
Silver’s recent surge above the $74 per ounce level—a historic threshold by all standards—did not occur in a vacuum. The metal posted gains of nearly 148% during 2025, far exceeding most conservative forecasts that had long viewed silver as merely tracking gold’s movements. This strong performance underscores growing market awareness that silver is no longer just a traditional precious metal, but a multi-dimensional strategic asset—serving simultaneously as a safe haven, a monetary hedge, and a vital industrial component, particularly after being classified as a critical mineral for the U.S. economy.
One of the most prominent current drivers is U.S. Federal Reserve monetary policy. Market expectations point to two additional interest rate cuts in 2026, fundamentally altering the opportunity cost equation for holding non-yielding assets, foremost among them silver. Historically, precious metals tend to thrive in low or declining interest rate environments, as investors reallocate capital away from fixed-income instruments toward real assets. In my view, silver could benefit even more than gold in this context, given its higher sensitivity to monetary shifts and its close linkage to industrial demand.
The weakness of the U.S. dollar represents another key support factor that cannot be overlooked. Dollar-denominated silver becomes more attractive to non-U.S. buyers as the greenback loses value, thereby expanding global demand. Moreover, growing speculation about the potential nomination by U.S. President Donald Trump of a new Federal Reserve Chair to succeed Jerome Powell—possibly favoring a more accommodative monetary stance—has reinforced market expectations of sustained downside pressure on the dollar in the medium term, a scenario that directly favors silver.
However, focusing solely on monetary factors does not provide a complete picture. The world is entering 2026 burdened by escalating geopolitical tensions, ranging from the ongoing war between Russia and Ukraine and the associated accusations over civilian targeting, to political frictions between the United States and Venezuela, in addition to other latent global flashpoints. In such an environment, investors naturally gravitate toward safe-haven assets, and this shift is no longer confined to gold alone. Thanks to its high liquidity, ease of trading, and relatively lower cost compared to gold, silver has become an increasingly attractive option for a broader base of retail and institutional investors alike.
Adding further complexity and momentum to the outlook is the supply-demand equation. Global markets are experiencing a noticeable supply shortage, with declining inventories at major hubs such as London and New York, while industrial demand for silver continues to rise—particularly in renewable energy, electronics, and clean technology sectors. At the same time, strong speculative demand has emerged in China, pushing Shanghai Futures Exchange premiums to record levels. These elevated premiums clearly signal robust domestic demand and tightening supply chains. In my view, this factor is especially critical, as it reflects real, physical demand that cannot be rapidly offset through increased production.
Taken together, these dynamics suggest that silver stands at a historic crossroads. While sharp price gains inevitably raise the risk of short-term corrections—a scenario that cannot be ruled out—the broader trend remains upward unless we witness a fundamental shift in monetary policy, a significant easing of geopolitical tensions, or a sudden surge in supply. In my opinion, silver in 2026 is not merely a speculative instrument, but a strategic tool for risk management and portfolio diversification, and it may well emerge as the new safe-haven star in a world increasingly defined by uncertainty and eroding confidence in traditional financial instruments.