All-time High: Silver Soars Past $85! Why Has It Become So Popular?

Huitong Network, January 12 — On Monday (January 12), spot silver surged strongly, with prices briefly touching above $85.50 and setting a new high, continuing to trade near historic highs during the North American session. This rally did not come without warning; instead, it was directly ignited by a sudden piece of news — the U.S. Department of Justice issued a subpoena to the Federal Reserve, sparking widespread discussion about the central bank's independence. Although this event has not yet led to any substantive changes in the policy framework, its symbolic significance is profound: once the Federal Reserve's decisions are no longer seen as neutral, market confidence in policy credibility will be shaken.

On Monday (January 12), spot silver surged strongly, with prices briefly touching above $85.50 and setting a new high, continuing to trade near historic highs during the North American session. This rally did not come without warning; instead, it was directly ignited by a sudden piece of news — the U.S. Department of Justice issued a subpoena to the Federal Reserve, sparking widespread discussion about the central bank's independence. Although this event has not yet led to any substantive changes in the policy framework, its symbolic significance is profound: once the Federal Reserve's decisions are no longer seen as neutral, market confidence in policy credibility will be shaken.



This uncertainty quickly spread to the financial markets, especially the precious metals market. Analysts pointed out that when central bank independence is questioned, traders instinctively raise their expectations for future inflation risks and worry about the dilution of the dollar's purchasing power. In this context, hard assets such as gold and silver naturally become the "safe havens" for capital.

Despite the intense market reaction, analysis suggests the probability of the Federal Reserve's institutional foundation being truly shaken remains low. If policy independence were indeed lost, it would trigger a series of chain reactions such as soaring financing costs and a widespread rise in risk premiums — a cost far beyond what any party can currently bear. Therefore, a more reasonable interpretation is that this news temporarily elevated the "uncertainty premium," prompting capital to adopt a "buy first, observe later" strategy, rather than immediately pricing in extreme changes to the long-term system.

The Interest Rate Game Enters a Critical Stage, Inflation Data Becomes the Biggest “Game-Changer”

While short-term sentiment has been ignited, the core logic affecting silver's movement still revolves around interest rate expectations. Last week's non-farm payroll data showed the U.S. unemployment rate fell to 4.4%, with the job market overall remaining robust, essentially ruling out a rate cut in January. However, the market still generally expects two rate cuts this year, with the first likely in June. This expectation is crucial for silver, because as a non-yielding asset, silver’s price is negatively correlated with the real interest rate (nominal rate minus inflation) — the lower the real interest rate, the smaller the opportunity cost of holding silver, and the higher its appeal.

The biggest suspense ahead lies in the upcoming release of the U.S. Consumer Price Index (CPI). If the data is hotter than expected, showing persistent inflation, the market may reprice towards a "more hawkish" path, i.e., delaying or even reducing expectations for rate cuts, which will push up real rates and put clear pressure on silver; conversely, if CPI comes in weak, it will help maintain the consensus of "two rate cuts this year," further supporting silver’s upward structure. In short, this data will become the key watershed that determines the direction of bulls and bears in the short term.

In the medium to long term, as long as the market believes the Federal Reserve will adopt a relatively moderate approach between economic growth and financial stability, real rates still have room to fall, providing fundamental support for silver. Of course, a bullish trend does not mean a straight-line surge, especially as current prices have already spiked rapidly—any marginal change in interest rate expectations could amplify volatility.

Geopolitical Powder Keg Smolders Again, Safe-Haven Funds Flock to Precious Metals

Apart from macro policy and interest rate games, geopolitical risks are also quietly intensifying market anxiety. Recently, the U.S. has sent stronger signals towards Iran, while Iran has responded by saying it is ready to retaliate forcefully, causing Middle East tensions to tighten again. Such events often disturb global risk appetite, prompting funds to quickly withdraw from risk assets and turn to traditional safe havens like gold and silver.

From the market reaction, gold took the lead, breaking through the important psychological threshold of $4,600 on Monday, and its strong performance further reinforced the bullish atmosphere across the entire precious metals sector. Gold, as an "anchor asset," often widens the market’s valuation tolerance for other precious metals like silver when it rallies. When traders begin to re-evaluate the value of safe havens, silver can "catch up and amplify" on the back of sentiment spillover and trend capital.

Technical Indicators Running High — What’s Next?

From a technical perspective, spot silver on the daily chart remains in a clear uptrend channel, having recently broken above prior highs and consolidating there, with the trend structure intact. The current price is not far from the intraday high of $85.53, showing that bulls are still in control. The MACD indicator continues to run above the zero axis, with positive momentum bars, indicating the uptrend remains unbroken.



However, caution is warranted for short-term overheating risks. The RSI indicator has reached 70.56, entering an elevated zone, signaling some overbought conditions in the market. This means subsequent movement is more likely to be a consolidation rather than a unilateral surge, and a significant pullback would not be surprising. Two key support levels to watch below: first, the previous key platform near $80.000, and second, technical interim support at $82.50. If the pullback does not break these areas, it may instead present a new opportunity for bullish positioning.

Looking ahead to the coming days, market catalysts are abundant. In addition to tomorrow’s U.S. CPI release, retail sales and PPI data will be published on Wednesday—though slightly lagging, they could still bring volatility. In addition, a potential U.S. Supreme Court ruling on tariffs could affect capital flows and indirectly influence safe-haven assets. If Thursday’s initial jobless claims unexpectedly weaken, it could once again ignite rate cut bets, which would be bullish for silver.

In summary, the current strong performance of silver is the result of the combined forces of institutional uncertainty, interest rate expectation games, and rising geopolitical risks. Although a short-term correction is possible, analysis suggests that as long as major supports hold and the core logic is not reversed, pullbacks are more likely to be viewed as structural opportunities. Going forward, traders will closely watch three main lines: whether inflation data shakes rate cut expectations, whether the topic of Federal Reserve independence continues to ferment, and whether geopolitical tensions escalate further. As long as any two of these three remain upward, the medium-term uptrend in silver remains worth anticipating.