The race to $100 for silver is increasingly becoming a reality rather than a fever dream.
Silver prices breached the $90-per-ounce for the first time ever on Wednesday as the rally continued amid expectations of further interest rate cuts by the US Federal Reserve in 2026.
At the time of writing, the silver contract on COMEX was at $90.510 per ounce, up 4.8%.
The contract had hit a record high of $91.343 per ounce earlier in the day.
Silver prices are likely to hit $100 per ounce in the first quarter of 2026, according to analysts at Citi.
They also said that the white metal is expected to continue outperforming gold.
Citi maintains its forecast that silver will outperform gold, despite both metals reaching new all-time highs this year.
However, the firm ultimately expects base metals to capture the primary market attention.
Geopolitics influence silver rally
Geopolitical tensions have dramatically increased safe-haven demand for precious metals among investors in the last few weeks.
Hundreds of protesters have been killed amid civil unrest in Iran.
The general public is demanding political change due to widespread government corruption, surging inflation, and the drastic fall of the Rial against the US Dollar (USD).
US President Donald Trump, in response to the ongoing situation, has issued a warning of military action against Tehran if the government persists in the killing of protesters.
Additionally, safe-haven assets have gained ground amid escalating worries regarding the Federal Reserve’s (Fed) autonomy.
These concerns follow criminal charges filed against Chairman Jerome Powell, which allege fund mismanagement concerning the renovation of the Washington headquarters.
Powell has dismissed these charges as a “pretext,” suggesting they are a consequence of the Fed basing interest rate decisions on the public interest rather than the president’s desires.
“The event led to a sharp decline in the US Dollar, as market experts warned that an attack on the Fed’s autonomous status could weigh on US sovereign rating,” Sagar Dua, editor at FXstreet, said in a report.
Rate cut bets
Softer-than-expected US inflation figures have prompted traders to expect further interest rate cuts by the Fed this year.
Lower interest rates bode well for non-yielding metals such as silver and gold.
In December, the US core Consumer Price Index recorded a monthly increase of 0.2% and an annual rise of 2.6%.
These figures were below analysts’ forecasts, which had anticipated a 0.3% month-on-month and 2.7% year-on-year increase.
US President Donald Trump welcomed the inflation figures amid his repeated demand for Federal Reserve Chair Jerome Powell to “meaningfully” cut interest rates,
Powell found support on Tuesday as top Wall Street bank CEOs and global central bank chiefs publicly backed him.
This show of support came after the news that the Trump administration had decided to investigate Powell, a move that also drew criticism from former Fed chiefs.
The market anticipates two rate reductions of 25 basis points each this year, with the first expected to occur in June.
Tight supply situation boost silver
Demand for silver is anticipated to increase, largely driven by growing industrial use in sectors like photovoltaics, e-mobility, power grid expansion, and artificial intelligence.
After five consecutive years of supply deficits, physical silver supplies are already tight, evidenced by low inventories in China and a decrease in COMEX inventories, according to Commerzbank AG.
“However, the sharp rise in prices could lead to a reduction in the use of silver in industrial applications (thrifting) or to silver being replaced by cheaper metals, where technically possible,” Carsten Fritsch, commodity analyst at Commerzbank.
High silver prices could stimulate an increase in market supply, coming from either greater mine output or expanded recycling efforts, he added.
However, it is questionable whether this will be sufficient to alleviate the shortage this year.
The German bank now expects silver prices to reach $92 per ounce by the middle of 2026, and $95 an ounce by the end of the year.
“The daily MACD remains significantly overbought, although that hasn’t prevented silver from hitting a succession of new highs. But, it is reason to be cautious up here,” said David Morrison, senior market analyst at Trade Nation.
While it’s certainly possible that silver’s rally can continue, the risks of a very large drawdown have also grown.
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