Why the price of silver reached an all-time high

The price of silver has hit a record high ahead of an expected interest rate cut by the US Federal Reserve, as demand from the technology sector for the precious metal remains high.

Silver rose above $60 an ounce (the equivalent of about 28 grams) in the spot market – where it is bought and sold for immediate delivery – for the first time on Tuesday (September 12).

Gold, which hit a record high earlier this year as concerns grew over the impact of U.S. tariffs and the outlook for the global economy, also posted gains this week.

Investors tend to invest in precious metals like gold and silver when interest rates fall and the U.S. dollar weakens.

On the afternoon of this Wednesday (12/10), the United States central bank reduced the country’s interest rates by 0.25 percent, to a range of 3.50% to 3.75% per year — the lowest level since September 2022. This decision was expected by the financial market.

When interest rates fall, traders typically buy assets like silver because it reduces the benefit of keeping money in the bank or buying short-term bonds, said Yeow Hwee Chua of Nanyang Technological University.

“This naturally shifts demand toward assets seen as a store of value, including silver,” he said.

This shift toward so-called “safe-haven” assets has also been a key reason why gold has hit new record highs in recent months, surpassing $4,000 an ounce for the first time.

The rise in silver can also be seen as an indirect effect of gold’s appreciation, with investors looking for cheaper alternatives, said Christopher Wong, an analyst at OCBC bank.

Gold has gained more than 50% this year, driven in part by heavy buying by central banks. Platinum and palladium prices have also increased this year.

Demand exceeds supply

Experts say the value of silver has also been boosted by strong demand from the technology sector, which has outstripped supply.

This has helped more than double the value of silver this year, outperforming other precious metals, including gold.

“Silver is not only an investment asset but also a physical resource” and more manufacturers are realizing the need for the material, said Kosmas Marinakis of the Singapore Management University.

This precious metal, which conducts electricity better than gold or copper, is used to produce goods such as electric vehicles and solar panels.

Experts predict that growing sales of electric vehicles will drive demand for silver, while advanced car batteries will require even more of the metal.

But it’s difficult to quickly increase the supply of silver because most of the world’s production is a byproduct of mines that mainly extract other metals, like lead, copper or gold.

The price of silver is also being boosted by concerns that the United States could impose tariffs on it under President Donald Trump’s trade policies.

Fears of possible tariffs have also led to a buildup of silver stockpiles in the United States, leading to shortages in other parts of the world.

The United States imports about two-thirds of its silver, which is used in manufacturing as well as jewelry and investments.

Manufacturers are working to secure their supplies and ensure their operations are not disrupted by shortages, which has helped drive up prices in global markets, Marinakis said.

He added that he expects the price of silver to remain high in the coming months.