Silver hits a historic high of $69: a surge in safe-haven asset allocation driven by geopolitical risks and central bank policies

Safe-Haven Sentiment Boosts Silver to New Highs

On Monday, the Asian market experienced a strong rally in safe-haven assets. Silver(XAG/USD) surged 2.5% in a single day, hitting a record high and approaching the $69 level. This rally is driven by increased market demand for safe assets amid escalating tensions in the Middle East. When regional geopolitical risks intensify, traditional safe-haven assets like silver often become the preferred choice for investors.

Middle East Tensions as a Recent Catalyst

Signals of conflict between Israel and Iran have intensified again. According to media reports, Israeli officials are concerned about Iran’s expanding ballistic missile program, especially since Iran has rebuilt its nuclear facilities after military strikes earlier this year, which are now nearing a significant scale. Decision-makers are evaluating the possibility of taking further military action. Such geopolitical uncertainties typically drive investors toward precious metals and other safe-haven instruments.

Federal Reserve Policy Expectations Remain Tight

From a monetary policy perspective, market expectations for the Federal Reserve’s January meeting remain unchanged toward a dovish stance. Although November inflation data showed some improvement, expectations for rate cuts have not increased accordingly. The core Consumer Price Index (CPI)(CPI) annual growth rate fell to 2.7%, down from 3% in October, but this has limited impact on the central bank’s policy stance.

Excluding food and energy, the core CPI also declined from an expected 3% and the previous month’s 3% to 2.6%. Despite the relatively mild data, Fed officials remain cautious about further rate cuts. Under the backdrop of relatively tight policy, the US dollar remains relatively strong, but silver’s appeal as an international safe-haven asset is reinforced by geopolitical risks.

Market Outlook

Currently, silver prices are supported by multiple factors: firstly, ongoing uncertainties in the Middle East continue to boost safe-haven demand; secondly, the Federal Reserve is expected to maintain its current policy stance in the near term, preventing further weakening of the dollar, which is positive for precious metals. In this environment, silver’s role as an alternative risk asset becomes even more significant. The future market trend will depend on the development of geopolitical events and further economic data.