The silver market opened the week on a firmer note, drawing support from a confluence of macroeconomic and geopolitical factors. After a mid-month sell-off, the precious metal is regaining its appeal as a hedge amid renewed trade policy uncertainty emanating from the United States and an elevated risk premium due to escalating tensions in the Middle East.
Geopolitics and Dollar Dynamics Provide Lift
A significant risk-off sentiment has permeated the markets following developments over the weekend. The U.S. Supreme Court ruled against expansive tariffs previously imposed by the government. In response, President Donald Trump announced plans for a blanket 15% global import levy. This has injected fresh regulatory uncertainty, dampening risk appetite and bolstering demand for traditional safe-haven assets like silver. Concurrently, pending U.S. trade talks with other major economies have been temporarily suspended.
Geopolitical friction is adding further support. Heightened tensions between the U.S. and Iran over the past 48 hours have driven a noticeable risk premium into precious metals markets. With diplomatic talks scheduled in Geneva and fears of escalation rising, investors are increasingly turning to stores of value.
Silver benefits from a dual narrative in this environment: its classic safe-haven status and its role as an industrially critical commodity.
U.S. Economic Data Creates a Supportive Backdrop
Recent economic indicators from the world’s largest economy are also contributing to silver’s strength. The latest estimate for fourth-quarter GDP showed an annualized growth rate of 1.4%, falling short of forecasts. Meanwhile, the core Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, remains stubbornly high at 3%.
This combination of softer growth and persistent inflation complicates the Fed’s interest rate path, creating a “higher for longer” uncertainty. This dynamic has periodically pressured the U.S. dollar. Since silver is priced in dollars, a weaker greenback makes the metal cheaper for international buyers, stimulating demand.
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Structural Deficit Meets Industrial Adaptation
Fundamentally, the market remains tight. Structural supply deficits persist, even as industrial demand—particularly from the solar panel and artificial intelligence sectors—stays robust.
However, high prices are triggering a market response. Major solar manufacturers are accelerating plans to partially substitute silver with base metals like copper in their modules. Initial producers aim to bring copper-based modules into mass production later in 2026. This shift faces hurdles, including concerns over technical reliability and potential increases in assembly costs. Additionally, recycling rates are climbing as more scrap metal re-enters the supply chain.
In the near term, the supply deficit continues to underpin prices. Over the medium term, however, the growing trends of substitution and recycling demonstrate that demand is not entirely price-insensitive.
Price Context: Rebounding from a Correction
The current price action follows a period of extreme volatility. According to the source data, silver hit an all-time high above $120 per troy ounce in late January 2026. A sharp correction driven by profit-taking ensued in the first half of February, pulling prices down to multi-month lows.
The metal has now broken upward from that consolidation phase. Data from Trading Economics shows it trading firmly above the $80 per troy ounce mark. The landscape for the coming weeks is thus defined by competing forces: tariff uncertainty, geopolitical risk, and supply deficits provide tailwinds, while industrial substitution and increased recycling emerge as growing counterweights.
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