Silver Hits Record Highs: How Supply Crisis and Rate Cut Expectations Are Driving Prices?

Under the dual influence of the Federal Reserve's easing policy expectations and tightening global silver supply, this traditional safe-haven asset is attracting increasing investor attention. Since 2025, silver has performed remarkably, with an 87% increase, even surpassing the 57% rise in gold during the same period, becoming the most robust metal in the precious metals market.

**Structural Supply Gap**

Silver has been in a long-term supply shortage, a contradiction that has been further intensified by recent market expectations. Concerns over potential US silver tariffs have prompted global investors to rush to the New York Mercantile Exchange (COMEX) for silver transfers, leading to rapid depletion of inventories at other exchanges. This inventory transfer not only reflects market concerns over policy risks but also provides a breeding ground for calendar arbitrage trading, which could trigger forced liquidation scenarios.

Currently, the COMEX Silver 2512 contract has officially entered the delivery notice period, and market volatility is expected to further increase. The structural imbalance of supply and demand remains a key foundation supporting silver prices.

**Rate Cut Expectations as a Catalyst**

Recent dovish stances by Federal Reserve officials have significantly strengthened market expectations for rate cuts. Currently, the market assigns an 85% probability to a 25 basis point rate cut by the Federal Reserve in December. An accommodative monetary policy environment is generally favorable for risk assets like silver, as rate cuts weaken the US dollar's attractiveness, thereby boosting dollar-denominated precious metal prices.

On November 28, COMEX silver futures broke through $54.65 per ounce, with spot silver approaching $54.22 per ounce, both hitting record highs. Meanwhile, other precious metals such as gold and platinum also surged collectively, with gold nearing the $4,200 mark.

**Room for Expansion in 2026**

Industry insiders are generally optimistic about the outlook. Michael DiRienzo, CEO of the Silver Institute, believes that this structural supply gap is likely to persist into 2026. Deutsche Bank even forecasts that silver will continue to record deficits next year, with an average annual price of $55 per ounce, and expects silver ETF holdings to potentially surpass the record set in 2021.

Goldman Sachs points out that, against the backdrop of the Federal Reserve's easing cycle, private investors view precious metals like silver and platinum as complementary tools to gold allocations for portfolio diversification. From the raw material price trend charts, the upward trend of these metals remains unchanged.

Market consensus indicates that as long as the supply gap cannot be fundamentally improved and rate cut expectations persist, silver may continue its upward trajectory into 2026. However, investors should also be mindful of volatility risks during the delivery period.