Silver's Battle for the $90 Threshold

Silver prices challenge $90/oz as trade uncertainty and Middle East risk battle Fed policy. The metal is set for a weekly gain despite high volatility.

As the trading week concluded, silver prices advanced, once again challenging the significant $90 per ounce level. This movement reflects a persistent tug-of-war between opposing market forces rather than a single catalyst. While geopolitical and trade tensions bolster demand for the metal's safe-haven appeal, a firm monetary policy stance from the U.S. Federal Reserve continues to apply downward pressure. The central question for investors is whether silver can establish a firm footing around this key price point.

Conflicting Forces Create a Standoff

Currently, three primary drivers are shaping the market, creating a complex stalemate.

First, trade policy from Washington provides crucial support. Following the U.S. Supreme Court's rejection of broad "reciprocal tariffs" on February 20, the administration pivoted to a new global 10% tariff rate under Section 122. Adding to the uncertainty, U.S. Trade Representative Jamieson Greer suggested tariffs for specific nations could potentially rise to 15% or higher, though details were not provided. This ambiguity fuels concerns over trade agreements, channeling capital into traditional haven assets like silver.

Second, geopolitical risk in the Middle East adds a premium. Reports indicate that while the third round of U.S.-Iran nuclear talks in Geneva on Thursday showed progress, with discussions scheduled to continue next week, a significant U.S. military buildup in the region persists. Several countries have also warned their citizens to leave Iran due to potential U.S. strikes. This environment sustains a baseline of hedging demand, even though the diplomatic progress temporarily capped gains.

Pushing in the opposite direction is U.S. monetary policy. The January PCE inflation reading of 3% reinforces expectations that the Fed will maintain its current restrictive course at its next meeting. Coupled with robust U.S. economic data, this strengthens the U.S. dollar and raises the opportunity cost of holding non-yielding assets like silver. The dollar index stood at 97.79 on Thursday.

Rebounding from a Weekly Dip

The price action this week showcased this volatility. After hitting a three-week high of $91.30 on Wednesday, silver briefly slipped below $87 on Thursday. A countermove emerged on Friday, with the metal climbing nearly 2% back toward $90.

Despite these swings, the weekly performance remains positive. Silver is on track for a weekly gain exceeding 3%. The broader trend is even more striking: on a year-over-year basis, silver has surged approximately 182.71%, highlighting a profound market shift over the past twelve months.

Structural Demand and a Key Delivery Date

Beyond short-term drivers, structural factors underpin the market. Today marks the "Last Notice Day" for COMEX March contracts, requiring holders to declare their intent for physical delivery. Market observers note a recent increase in delivery demand, linked to concerns about the disconnect between paper positions and available physical metal supply.

Silver's unique profile is further supported by robust industrial consumption, which distinguishes it from pure safe-haven assets. According to the Silver Institute, global silver demand reached approximately 1.2 billion ounces in 2024. Industrial offtake rose by 7% to 700 million ounces, driven significantly by the photovoltaics sector. Concurrently, the market has experienced a supply deficit for four consecutive years, providing a fundamental price floor.

As March begins, market focus will center on three developments: the continuation of U.S.-Iran talks next week, potential clarifications on U.S. tariff plans, and upcoming economic and inflation data that will signal the Fed's future path. The interplay of these factors will determine if silver can consolidate near $90 or if headwinds from a strong dollar and interest rates regain dominance.