Silver Surges as Fed Leadership Uncertainty and Tariff Risks Grip Markets

Key Moments

Fed Uncertainty Fuels Flight Into Silver

Silver extended its rally on Wednesday, trading around $62 per ounce. It hovered near $50 in late November, so the pace of the move has been rapid. Earlier in the year, it averaged close to $30.

The latest surge arrived just as news broke that the US administration is interviewing final contenders to replace Federal Reserve Chair Jerome Powell. The timing added another layer of uncertainty to the market. Investors are also anticipating a cut to the central bank’s benchmark interest rate following the Fed’s meeting scheduled for later on Wednesday.

The shortlist for the chair position, particularly the widely reported frontrunner Kevin Hassett, director of Donald Trump’s National Economic Council, is viewed as more inclined toward aggressive rate reductions, in contrast with the slower pace of easing under Powell.

Rate-Cut Expectations and Relative Appeal of Silver

Since January, the Fed led by Powell has implemented two quarter-point rate cuts, one in September and another in October. This measured policy easing has weighed on returns from interest-bearing instruments, enhancing the comparative appeal of non-yielding assets such as silver.

Because silver, like gold, does not provide interest or dividends, it typically loses favor when US policy rates are elevated and investors can obtain stronger income from cash or bonds. In the current environment, however, reduced yields on traditional interest-bearing assets have prompted a rotation into precious metals.

The metal’s price has roughly doubled so far this year, outstripping gold’s 60% gain, which has driven bullion to record levels.

Critical Minerals Status and Tariff Jitters

Alongside monetary policy dynamics, market participants are watching closely for any indication of US trade action on silver. In early November, the US government added the metal to its 2025 Critical Minerals List, a designation generally applied to materials regarded as vital to the economy and national security.

The new designation also exposes silver to possible Section 232 scrutiny. That’s the same tool the US used when it imposed tariffs on steel and aluminum. Section 232 investigations give the US government authority to impose tariffs, quotas, or other restrictions on imports deemed to create excessive dependence on foreign supply, thereby threatening national security.

At present, no Section 232 probe targeting silver has been initiated, and no related tariffs have been announced. Nonetheless, the possibility alone has unsettled traders, as any future duties on imported silver could disrupt established trade patterns and raise input costs for manufacturers. These concerns have already led to an uptick in silver stockpiling.

Industrial Demand Adds to Price Momentum

Rising demand from selected industrial users is reinforcing the upward pressure on prices. Silver is an essential component in the manufacture of electric vehicles and solar panels, and industrial applications represent more than half of total silver consumption.

As both policy uncertainty and trade risks intersect with solid industrial usage, the metal’s price trajectory has been driven by a combination of macroeconomic and sector-specific forces.

Silver Market Snapshot