Silver hits record highs as US-China tensions, Fed rate cut bets fuel demand

• Silver reaches record highs above $52 amid escalating US-China trade tensions
• Safe-haven demand remains firm as US-China trade frictions and the US government shutdown intensify market uncertainty.
• Expectations of further Fed rate cuts and falling US Treasury yields continue to support the precious metal.

Silver (XAG/USD) surges to unprecedented levels on Monday, extending its rally for a ninth consecutive week. The metal trades around $51.55 at the time of writing, up over 3% on the day, after reaching a new all-time high at $52.07 earlier in the day. The renewed appetite for safe-haven assets is driven by mounting fears of a global trade shock following US President Donald Trump's announcement of 100% tariffs on all Chinese imports from November 1, a move that sparked broad risk aversion across financial markets.

The tensions escalated after China unveiled new export restrictions on rare earth elements, raising concerns about potential disruptions to critical global supply chains. While weekend remarks from both Washington and Beijing suggested the possibility of renewed dialogue, investors remain cautious. According to US Treasury Secretary Scott Bessent, both leaders are still expected to meet later this month, though the tone of negotiations remains uncertain.

Meanwhile, the prolonged US government shutdown, now entering its third week, is deepening the sense of instability. Federal agencies remain closed, and thousands of employees have been placed on unpaid leave as the Senate postpones any vote until after the Columbus Day holiday. This fiscal paralysis reinforces demand for safe-haven assets such as Silver.

Expectations of further monetary easing by the Federal Reserve (Fed) are also boosting precious metals. Markets are currently pricing in a near 95% chance of a rate cut at the Fed's October meeting and an additional reduction in December, according to the CME FedWatch tool. Lower interest rates tend to weaken the US Dollar (USD) and US Treasury yields, thereby increasing the appeal of non-yielding assets such as Silver.

Beyond monetary policy, geopolitical risks continue to underpin the Silver rally. The persistent Russia-Ukraine conflict, combined with threats of new sanctions and potential missile deliveries from the United States to Kyiv, maintains global investors' appetite for safety. In this environment, Silver, both an industrial and a precious metal, benefits from its dual role as a hedge against political instability and as a proxy for long-term economic uncertainty.