Silver holds near all-time highs amid safe-haven demand, tightening supply

• Silver is holding close to Thursday's record high of $51.24.
• The US government shutdown and expectations of Fed rate cuts sustain demand for safe-haven assets.
• Supply shortages in the London bullion market and robust inflows into Silver ETFs continue to support prices.

Silver (XAG/USD) is holding firm on Friday, trading around $50.70 at the time of writing, up 3.20% for the day, near Thursday's all-time high of $51.24. The grey metal remains driven by persistent safe-haven demand and mounting evidence of supply tightness in global bullion markets.

According to ING analysts Ewa Manthey and Warren Patterson, "a lack of readily available Silver in London is driving prices up, largely due to fears of potential US tariffs that have triggered a rush to ship Silver across the Atlantic." The bank highlights that total known holdings in Silver Exchange Traded Funds (ETFs) have risen for a third consecutive session, with inflows of more than 620 thousand ounces, bringing total holdings to 822.6 million ounces.

The rally is further supported by expectations of continued monetary easing from the US Federal Reserve (Fed). Minutes from the September Federal Open Market Committee (FOMC) meeting released on Wednesday revealed growing support among policymakers for two additional rate cuts by year-end, amid signs of a weakening labor market and a deepening fiscal standoff in Washington.

The ongoing US government shutdown, now in its second week, continues to weigh on investor confidence. The lack of progress in Congress to approve funding bills has suspended several key data releases, including the September Nonfarm Payrolls (NFP) report. This paralysis increases the risk of slower growth and reinforces expectations of additional policy support from the Fed.

Against this backdrop, the US Dollar (USD) retreats slightly, with the US Dollar Index (DXY) easing below 99.50 on Friday. The weaker Greenback makes Silver more attractive to foreign investors, adding to the metal's bullish momentum.

In addition to monetary and political factors, the Silver Institute projects a fifth consecutive annual supply deficit in 2025, underlining the metal's robust structural fundamentals.

The combination of monetary easing prospects by the Fed, fiscal uncertainty in the US, and tightening supply conditions suggests that Silver's bullish momentum may persist in the near term, provided that the Fed maintains its dovish stance and the US fiscal impasse remains unresolved.