Silver breaks through the $54 mark! Is there upward momentum into 2026?

From supply tightness to monetary easing, silver is brewing new investment opportunities.

The silver market has recently experienced a strong rally. At the end of November, the silver futures price on the New York Mercantile Exchange broke the historical high of $54.65 per ounce, and the spot price also approached $54.22 per ounce. Looking back at the performance from the beginning of the year to now, silver has gained a total of 87%, far surpassing gold's 57% increase during the same period, making it a star among precious metals. Based on long-term oil price fluctuations, the cyclical rise of commodities often reflects deeper economic expectations changes.

**Supply Gap Widens, Market Rush Intensifies**

The core drivers behind the surge in silver prices come from two directions. First is the ongoing imbalance on the supply side. Silver has been in a state of persistent supply shortage for several years, and this situation has recently worsened due to tariff expectations. To hedge against potential US tariff risks, the market has seen a wave of transportation of silver to New York, which directly led to a rapid decline in inventories at other exchanges worldwide. The sharp inventory drop has not only triggered arbitrage trading but also hints at potential forced liquidation risks. Currently, the COMEX silver contract 12 has officially entered delivery, further amplifying volatility.

**Rate Cut Expectations Rise, Precious Metals Benefit Collectively**

Another driving force comes from shifts in monetary policy. Federal Reserve officials have recently signaled a clear dovish stance, and market expectations for rate cuts continue to rise. According to the latest trading data, the market assigns an 85% probability of a 25 basis point rate cut in December. Under such easing expectations, non-yielding precious metals assets become more attractive. Gold prices have approached the $4,200 level, and silver, platinum, and other metals are also rising, forming a coordinated upward movement across the entire precious metals sector.

**Structural Gap in 2026 Likely to Persist**

Looking ahead to next year, professional institutions generally hold an optimistic attitude. Michael DiRienzo, Executive Director of the World Silver Institute, believes that "the structural gap is likely to continue into 2026." Deutsche Bank's forecast is more specific, predicting that silver will continue to run a deficit in 2026, with the average annual price potentially reaching $55 per ounce, and holdings of silver ETFs are expected to surpass the peak levels of 2021.

Goldman Sachs' analysis points out that as the Federal Reserve enters an easing cycle and investors diversify their asset allocations, private investors will continue to regard silver, platinum, and palladium as alternative assets outside of gold. This suggests that the upward trend of precious metals like silver still has room to expand further.

Overall, silver faces a dual support of ongoing supply tightness and a loosening monetary environment, laying a foundation for its price performance into 2026. When evaluating precious metals allocations, the structural opportunities in silver are worth paying attention to.