White Metal Reaches New Peak Amid Fed Rate Cut Bets and Supply Tightness

The precious metals market witnessed a significant milestone on Tuesday, December 9, as silver price climbed to an unprecedented level, touching US$60.56 per ounce. This surge represents a continuation of the rally that ignited on November 28, when CME Group (NASDAQ:CME) experienced a trading halt on the Comex due to infrastructure issues at a data center serving the exchange. The disruption, resolved by early morning trading, marked one of the most extended outages the major exchange operator has faced in recent years.

Multiple Forces Propelling Silver’s Rally

The current momentum in the silver market reflects a convergence of factors, with monetary policy expectations playing a central role. Market participants are increasingly betting on an interest rate reduction from the US Federal Reserve at its December 10 meeting. The CME Group’s FedWatch tool has shifted to demonstrate strong consensus for a cut, a notable shift from earlier uncertainty among traders.

This policy sentiment has been further amplified by recent developments in the Fed’s leadership landscape. On November 30, US President Donald Trump indicated that he has selected the next Federal Reserve chair, with Kevin Hassett, director of the White House’s National Economic Council, widely viewed as the leading candidate. Given Trump’s vocal criticism of current Fed Chair Jerome Powell regarding the pace of rate reductions, a successor aligned with the administration’s lower-rate preferences appears increasingly probable.

Hassett’s remarks on a major news network hinted at policy direction: “I think that the American people could expect President Trump to pick somebody who’s going to help them have cheaper car loans and easier access to mortgages at lower rate.” His association with these comments subsequently influenced market expectations.

Why Lower Rates Benefit Silver and Gold

Precious metals traditionally perform better in a lower interest rate environment, as reduced borrowing costs diminish the opportunity cost of holding non-yielding assets. This dynamic has directly supported both silver and its sister metal gold throughout this cycle. The combined effect of anticipated rate cuts and leadership transition discussions has provided robust support for precious metal valuations.

The performance gap between the two metals tells an interesting story: silver news today highlights its dramatic outperformance, with the white metal gaining approximately 100 percent year-to-date, significantly exceeding gold’s roughly 59 percent appreciation. Despite gold’s continued strength above US$4,200 per ounce, it remains below its previous all-time high, whereas silver has broken through historical barriers.

Supply Constraints and Industrial Catalysts

Beyond monetary policy, structural factors continue to underpin silver’s strength. Chinese stockpiles of the white metal have declined to their lowest level in a decade following substantial shipments to London, according to November reporting. This supply tightness contrasts sharply with industrial demand, which reached record levels in 2024.

The industrial consumption picture reveals why silver maintains investment appeal. According to the Silver Institute, industrial demand totaled 680.5 million ounces in 2024, driven by applications in electrical grid modernization, vehicle electrification technology, and photovoltaic systems. Notably, despite a 3 percent year-on-year decline in total demand, the white metal continued to demonstrate a supply deficit, marking the fourth consecutive year that consumption exceeded available supply by 148.9 million ounces.

Additional tailwinds have emerged from tariff discussions and silver’s designation as a critical mineral by US authorities, both contributing to 2026 positioning.

Market Outlook and Expert Perspective

Analysts remain divided on whether silver can sustain its outperformance trajectory into 2026. However, market veterans point to historical patterns. Industry observers note that while gold typically attracts the most consistent capital flows, silver sector dynamics have historically generated larger percentage returns during precious metals bull markets. This dynamic may persist as rate expectations and supply considerations continue reshaping valuations.

The extended period of supply deficit, combined with Fed policy shifts and industrial demand resilience, has created conditions that support continued strength in the white metal market.