Silver prices surged dramatically in January

After fluctuating at a high level at the end of December 2025, silver prices surged violently in January. According to the commodity market analysis system of SunSirs, the market price of silver on January 28, 2026, was 29,184.67 RMB/kg, an increase of 57.93% compared to the peak spot price of 18,480 RMB/kg at the beginning of the month (January 3).

The sharp rise in silver prices on January 28th was driven by a triple confluence of factors: its financial attributes, supply-demand imbalance, and technical and fundamental market forces.  The core drivers were strengthened expectations of interest rate cuts, a surge in industrial demand, and low inventory levels amplifying price volatility. Details are as follows:

I. Financial Attributes: A confluence of macroeconomic factors and safe-haven demand

Interest Rate Cut Expectations and a Weaker Dollar: With US inflation and employment data cooling, the market was pricing in a 70% probability of a Federal Reserve interest rate cut in June. Lower real interest rates reduce the cost of holding precious metals; the US dollar index has fallen below 96 (a nearly four-year low), increasing the attractiveness of dollar-denominated silver, creating a double boost from "interest rate cuts + dollar depreciation."

Gold and silver correlation and ratio correction: London spot gold broke through $5,290 per ounce, and the gold-silver ratio fell to 45.5 (a nearly 13-year low). Silver has ample momentum for further gains, as funds flow into silver due to the spillover effect of the gold bull market.

Geopolitical tensions and safe-haven demand are rising: the situation in the Middle East and the Red Sea crisis continue, and the risk of a US government shutdown is increasing, leading investors to increase their allocation to precious metals as a safe haven, thus driving up demand.

II. Supply and Demand Fundamentals: Structural Gap Continues to Widen

1. Rigid constraints on the supply side

Starting January 1st, China implemented a "one-case-one-review" control system for silver exports, reducing global supply by 4,500-5,000 tons (accounting for 60%-70% of global trade volume).

72% of silver comes from copper-zinc polymetallic deposits. Independent expansion projects have a cycle of 5-10 years, and mined silver production is expected to decrease by 0.6% year-on-year in 2026, marking the fifth consecutive year of decline.

Inventories are extremely low: LBMA deliverable inventory is only 233 tons, COMEX inventory is down 70% year-on-year, and global visible inventory only covers 1.2 months of consumption, leading to tight supply and supporting premiums.

2. Explosive growth in demand

Photovoltaics: Global installed capacity is expected to reach 600 GW in 2026. The penetration of N-type batteries will increase silver consumption to 210 million ounces, accounting for 34%-55% of industrial demand. Domestic inventory replenishment orders are scheduled until mid-February.

AI and New Energy: The use of silver in AI server chip packaging increased by 35% year-on-year, and the use of silver in power batteries for new energy vehicles increased by 28% annually. This "silver replacing copper" trend is creating an additional demand of 300,000 to 500,000 tons.

The supply-demand gap is widening: The global deficit is projected to reach 203 million ounces (approximately 6,316 tons) in 2026, marking the sixth consecutive year of shortage.

III. Funding and Technical Aspects: The interplay of sentiment and capital

Accelerated capital inflows: Silver ETFs added 210 tons in January, and long positions in the futures market reached a historical high, with speculative funds driving up prices.

Technical indicators reinforce the trend: the daily chart shows a bullish alignment, the Bollinger Bands are expanding upwards, and the price is moving along the upper band with no significant divergence, triggering trend-following funds to enter the market.

Futures and spot market structure support: The spot market continues to trade at a premium, with futures leading the rally followed by a catch-up in spot prices. Low inventory levels amplify price volatility, making prices prone to rising and less likely to fall in the short term.

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