What's Driving Silver Toward Record Highs in Late 2025

Precious metals traders are watching silver make a remarkable run. The white metal broke through US$60 per ounce this week, marking fresh all-time highs as multiple market forces align to support prices. Silver’s stock price performance has been nothing short of spectacular — up roughly 100% year-to-date compared to gold’s 59% gain, signaling a significant outperformance cycle.

Fed Policy Expectations Fuel the Rally

The momentum shift coincides with shifting expectations around US monetary policy. With the Federal Reserve’s December meeting concluding this week, market participants are increasingly pricing in another interest rate reduction. CME Group’s FedWatch tool now reflects strong consensus for a rate cut, a sharp reversal from earlier uncertainty in the market.

This sentiment is reinforced by recent leadership signals. Following announcements about the next Fed chair selection, traders are positioning for a monetary stance more aligned with looser credit conditions. Kevin Hassett, the White House’s National Economic Council director, is widely viewed as the likely pick to lead the central bank — a candidate expected to favor lower rates. His market-friendly positioning has already triggered positive reactions across asset classes.

Lower interest rates historically benefit precious metals by reducing the opportunity cost of holding non-yielding assets. This dynamic has been a key driver supporting both silver and gold rallies throughout 2025.

Market Structure Shifts and Supply-Demand Dynamics

Beyond monetary policy, structural factors are reshaping silver’s market fundamentals. A significant supply tightening has emerged recently — Chinese silver stockpiles hit their lowest levels in a decade as massive shipments flowed to London. This inventory drain is creating supply-side pressure that supports prices.

On the demand front, industrial silver consumption continues to expand. The Silver Institute reported that 2024 saw record industrial demand of 680.5 million ounces, driven by grid modernization, vehicle electrification, and solar photovoltaic deployment. Notably, total silver demand exceeded supply for the fourth consecutive year, creating a 148.9 million ounce deficit in 2024 alone.

Technical Breakthrough and Market Narrative

Silver’s current breakout gained momentum following a November trading disruption at CME Group’s Comex platform, which temporarily halted activity due to infrastructure issues at a Chicago-area data center. The incident, among the longest outages in recent years, rattled traders but ultimately highlighted the tightness of available supplies and the sensitivity of the market to any disruptions.

What’s particularly striking is how silver has begun to outpace gold by percentage gains — a reversal of typical precious metals cycles where gold typically leads. Tariff concerns, silver’s new classification as a critical mineral in the US, and geopolitical uncertainty have all contributed to this shift.

What Experts Are Watching Next

Market participants remain divided on silver’s trajectory into 2026, but sentiment among commodity specialists leans bullish. The conventional wisdom in precious metals investing suggests that while steady gains accumulate in gold, explosive returns often emerge in the silver sector during bull cycles. With supply constraints mounting, industrial demand accelerating, and monetary policy turning accommodative, the conditions appear favorable for silver to maintain its outperformance through the coming year.

The current market structure — characterized by supply deficits, growing industrial demand, and expanding monetary liquidity — creates an environment where silver’s price discovery could extend higher before meeting significant resistance.