Silver hits $56 record as gold tops $4,200 on Fed rate cuts

1. Silver’s explosive breakout sets new benchmark

Spot silver prices rocketed to approximately $56.70 per ounce on November 29, establishing a fresh all-time high with a single-session gain of roughly 6%. Throughout November alone, the white metal posted mid-teen percentage gains, with some market trackers recording monthly increases between 16% and 17%.

The numbers tell a remarkable story of acceleration. Over just 11 months, silver has nearly doubled in value. Year-to-date gains for 2025 have reached approximately 94%, significantly outpacing gold’s already impressive 60% advance. In India, the world’s largest silver consumer, prices spiked to roughly ₹170,000 per kilogram in mid-October, representing an 85% increase from the start of the year.

Looking at the longer trajectory, silver has climbed about 163% since October 2023, when it traded near $20.70 per ounce. This sustained uptrend has transformed silver from an afterthought in many portfolios into the star performer of the precious metals complex.

2. Gold maintains steady strength above $4,200

While silver steals the spotlight, gold continues its own remarkable performance. On November 29, spot gold traded around $4,210 per ounce, marking a two-week high and extending four consecutive days of gains. The weekly advance exceeded 3.5%, with monthly gains topping 5%.

Gold reached a record high of approximately $4,381 per ounce on October 20 and has mostly held above the psychologically significant $4,000 level since. The metal is on track for its strongest annual performance since the late 1970s, with year-to-date gains approaching 59% to 60%.

However, silver’s outperformance has shifted the traditional dynamic. Over the past 12 months, gold has risen about 59% while silver has surged roughly 87%. This performance gap explains why analysts increasingly view silver as the true leader in precious metals, despite its historical reputation for extreme volatility.

Federal Reserve policy shift fuels investor confidence

The primary catalyst behind the late-November surge centers on shifting Federal Reserve expectations. Multiple data points and official comments have convinced markets that another interest rate cut in December is nearly certain, with traders now pricing in an 85% to 87% probability compared to just 30% to 50% a week earlier.

Softer-than-expected retail sales data and benign producer prices have reinforced the case for additional easing without reigniting inflation concerns. Federal Reserve officials including Governor Christopher Waller and New York Fed President John Williams have delivered notably dovish commentary, emphasizing economic deceleration and labor market weakness.

Lower interest rates reduce the opportunity cost of holding non-yielding assets like precious metals while typically weighing on the dollar and bond yields. This environment historically creates ideal conditions for gold and silver appreciation.

Technical disruption amplifies metal moves

An unexpected factor intensified the rally. On November 28, a technical outage temporarily halted trading on CME Group’s Globex platform, where major gold and silver futures contracts are listed. When trading resumed, pent-up orders and renewed focus on metals amplified the upside momentum. Gold for February delivery closed about 1.3% higher at $4,254.90 per ounce, while spot silver shot to its fresh record near $56.80.

The episode highlighted how thin liquidity and technical glitches can magnify price movements in markets already primed by macroeconomic headlines.

India’s demand surge meets global supply crunch

Beyond monetary policy, structural factors have created a perfect storm for silver. India consumes approximately 4,000 metric tons annually, predominantly for jewelry, utensils and traditional ornaments. After the monsoon and harvest season, rural households flush with cash typically purchase precious metals rather than depositing funds in banks.

This seasonal buying pattern coincided with Diwali festival celebrations and a global supply squeeze this year, supercharging prices precisely when Indian demand peaked. Analysts describe gold and increasingly silver as the first destination for post-harvest savings in rural India.

London vaults show dramatic inventory decline

Supply side data from the London Bullion Market Association paints a stark picture. Silver holdings in London vaults have fallen by roughly one-third over recent years, dropping from about 31,000 metric tons in mid-2022 to around 22,000 tons by March 2025, their lowest level in years.

In October, lease rates spiked to the equivalent of 200% per year on an overnight basis, signaling extreme shortage. Traders reported situations requiring air freight rather than standard shipping to meet urgent delivery needs, underscoring how depleted flexible inventory has become.

Adding another dimension, Chinese silver exports climbed to a record above 660 tonnes in October even as domestic inventories dropped to decade lows. Meanwhile, the United States has formally classified silver as a critical mineral, reflecting concerns over long-term availability and strategic importance.

Green energy and technology reshape demand landscape

Industrial applications are quietly transforming silver’s long-term outlook. Global industrial demand rose to approximately 689 million ounces in 2024 from about 644 million the previous year. Solar panel production alone consumed roughly 244 million ounces, up sharply from 192 million a year earlier and more than double 2020 levels.

The International Energy Agency projects about 4,000 gigawatts of new solar capacity between 2024 and 2030. This trajectory could add approximately 150 million ounces of annual silver demand by 2030 just from solar applications, equivalent to roughly 13% of total 2024 physical demand.

Electric vehicle production adds another dimension. Current vehicles use between 25 and 50 grams of silver, but future solid-state battery designs could require up to a kilogram per car if silver-based chemistries achieve scale adoption. Combined with data center and artificial intelligence infrastructure needs, these emerging technologies create sustained structural demand.

Supply constraints compound the equation

Silver mine production has trended lower for roughly a decade, particularly in Latin America. The market deficit swelled to more than 500 million ounces in 2024, a dramatic increase from the relatively modest deficit the previous year. Much of the world’s silver emerges as a byproduct of mining other metals like copper, lead, zinc and gold, making it difficult for producers to increase output purely in response to price signals.

Price ratio suggests continued upside potential

The gold-silver ratio, measuring how many ounces of silver equal one ounce of gold, stood above 100 in January 2025. By late November, with gold around $4,207 and silver near $55, the ratio had fallen to just under 77. The historical long-term average hovers closer to 70, suggesting further upside potential for silver if gold prices stabilize or advance modestly.

Historical comparisons support silver’s leverage to gold bull markets. During the 2008-2011 cycle, silver rallied approximately 431% versus gold’s 168% rise over the same period. This pattern reinforces silver’s reputation as a leveraged play on precious metals sentiment.

Analysts project continued strength with caution

Deutsche Bank recently raised its 2026 gold price target to $4,450 per ounce from $4,000, projecting a broad trading range of $3,950 to $4,950 next year. The bank maintains a 2027 target of $5,150, citing persistent central bank buying, ongoing exchange-traded fund inflows and tight physical markets across multiple precious metals.

For silver, strategists expect the market to remain in deficit for a fifth consecutive year in 2025, with lease rates and physical tightness suggesting minimal slack. Technical analysts note that price charts have turned decisively bullish in recent weeks, attracting trend-following traders.

However, significant risks remain. Silver’s smaller market size means modest flows can trigger sharp moves in either direction. If the Federal Reserve delivers less easing than markets currently expect, rising real yields and dollar strength could pressure metals. Leveraged futures positions can force liquidations during volatility, amplifying both rallies and corrections.

The precious metals rally heading into December 2025 reflects genuine structural shifts in supply and demand fundamentals layered atop supportive monetary policy. Whether this momentum continues depends on Federal Reserve actions, industrial demand trends and investor appetite for alternatives to traditional financial assets.

Source: Information compiled from TechStock²

Disclaimer: This article is for informational purposes only and not financial advice. Always research before making investment decisions.