Silver (XAG) Forecast: Silver Market Explodes to Record High—Momentum Points to $100

Silver Soars Past $92: Industrial Demand and Fed Rate Cut Bets Fuel Historic Rally

The stunning rally in Spot Silver has taken the market to another record high at $92.25 on Wednesday, moving closer to the $100.00 level that some analysts had pegged as the main objective in 2026. No one was confident that silver would repeat last year’s performance of 140-150% return (depending on where you get your quotes), but so far this year, the market is up a whopping 28.77%, and it’s only January 14.

At 14:16 GMT, XAG/USD is trading $91.97, up $5.05 or +5.80%.

Dual Catalysts: Iran Tensions and Inflation Data Drive Price Action

With gold being a traditional safe-haven investment, I can understand why it is reacting bullishly to the escalating turmoil in Iran, but I think the main positive for silver is yesterday’s inflation report, which solidified interest rate cut bets by the Fed. Meanwhile, the geopolitical tensions aren’t hurting prices either as worried investors flock toward the relatively “cheaper” silver.

The previously mentioned factors are great for short-term appreciation. They are essentially the cherry on top of a bull market being driven by robust industrial and investment demand and tightening inventories.

Softer CPI Data Gives Fed Flexibility on Rate Cuts

On Tuesday, the U.S. consumer inflation report showed that Core CPI rose 0.2% month-on-month and 2.6% year-on-year in December, falling short of expert forecasts of 0.3% and 2.7%, respectively. This report accomplished two things: it took any chance of a January rate cut off the table, and it gave the Fed some leeway for future cuts. In other words, the data suggested the Fed has flexibility, rather than being forced into a rate cut. However, the numbers did not clarify when the first cut would take place, nor did they indicate how many there would be.

With no change expected from the Fed at the next meeting on January 27-28, we can assume that central bankers will continue to monitor the data and react accordingly when the time is right. Currently, the FOMC is projecting one rate cut in 2026, while the market is pricing in at least two.

Technical Outlook: Momentum Points to $100 Target

Technically, the trend is up. The current rally has pulled the market well above its nearest swing bottom support at $73.84. The market is showing no reaction to the potentially bearish “rebalancing” of passive commodity funds that is currently taking place until January 15. My guess is that buyers were waiting with both hands to buy the estimated 12,000 silver futures contracts that were liquidated by the funds, so there was no massive sell-off, just a two-day pullback.

Trend line support that has been guiding the market higher since November 21 is currently at $77.34. With prices at $92.00, I can declare the rally as “hot”. However, as long as buyers are willing to chase prices higher, there should be no worries of a correction. The biggest fear is another margin requirement hike by the regulators. The CME raised margins twice in the last week of December. This time they may be more aggressive if their indicators turn “hot”. I can’t foresee any reason why the current momentum can’t drive prices to $100.00 except an outside influence like a CME margin hike.

More Information in our Economic Calendar.