Silver (XAG/USD) extended its bullish momentum on Monday, trading around $69.05 at the time of writing, up 2.75% on the day, after hitting a new all-time high of $69.47 earlier in the day. The white metal benefited from strong follow-through buying after several weeks of steady gains, supported by a macroeconomic and geopolitical backdrop that remains favorable for safe-haven assets.

Silver's rise occurred amid persistent expectations for monetary easing in the United States. Markets continue to price in additional interest rate cuts by the Federal Reserve (Fed) through 2026, as recent data shows a gradual decline in inflationary pressures and a softer US labor market. The lower interest rate environment reduces the opportunity cost of holding non-yielding assets, providing structural support for the precious metal.

A weaker US dollar (USD) was another key driver. The weakening US dollar has made silver more attractive to overseas investors. The US Dollar Index (DXY), which tracks the value of the US dollar against a basket of major currencies, is trading around 98.35, weakening slightly after hitting a one-week high at the end of last week. This decline in the US dollar adds to silver's upward momentum, which is already supported by solid investment demand.

On the geopolitical front, tensions remain high and continue to encourage investor caution. Resurgent friction between Iran and Israel has reignited concerns about a potential regional escalation, while rising tensions between the United States and Venezuela, particularly over oil exports, add to global uncertainty. Meanwhile, diplomatic efforts regarding the war in Ukraine have been slow, with no decisive breakthroughs, so geopolitical risks remain high.

As markets approach year-end, reduced liquidity could lead to a period of consolidation or mild profit-taking after the recent surge. Nonetheless, several US macroeconomic data releases due on Tuesday, including the four-week average of the ADP Employment Change, the preliminary third-quarter Gross Domestic Product report, Durable Goods Orders, Industrial Production, and Consumer Confidence, could provide short-term direction for Silver.

Overall, as long as accommodative monetary policy expectations, US dollar weakness, and geopolitical uncertainty persist, the fundamental bias for Silver remains constructive, although there is a risk of a temporary pause after setting new record highs. (alg)

Source: FXstreet