SunSirs: After a Period of Consolidation, Silver Prices Continued to Rise in January

After fluctuating within a price range, silver prices continued to surge

After fluctuating at a high level at the end of December 2025, silver prices continued to surge in January. According to SunSirs' commodity market analysis system, the market price of silver on the afternoon of January 13, 2026, was 21,043.67 RMB/kg, an increase of 13.87% compared to the peak spot price of 18,480 RMB/kg at the beginning of the month (January 3).

Market Analysis

The recent surge in silver prices is the result of a confluence of macroeconomic factors, supply and demand fundamentals, geopolitical risks, and market sentiment. The core drivers included rising expectations of interest rate cuts by the Federal Reserve, booming industrial demand coupled with widening supply gaps, heightened geopolitical tensions driving safe-haven buying, and policy measures such as Chinese export controls, all amplified by speculative capital flows. Specifically:

Macro Finance: Falling Interest Rate Expectations and Weakening Dollar, Lowering Opportunity Costs:

In January 2026, US CPI and core CPI came in lower than expected, leading the market to bet that the Federal Reserve would cut interest rates by 25 basis points in March with a 75% probability, and that there would be consecutive rate cuts in June with a probability exceeding 90%. This pushed real interest rates down and the US dollar index below 100, increasing the attractiveness of silver priced in US dollars. For every 1% drop in the dollar, silver typically rises by 1.5%-2%, and the opportunity cost of holding silver decreases accordingly.

Developed economies face high levels of debt and a weakening US dollar, leading central banks to increase their holdings of gold and other precious metals. Silver, following gold, is benefiting from this asset revaluation.

Supply and demand fundamentals: Industrial demand was surging, and the supply gap continued to widen

Demand side: Solar power is the largest consumer of silver, with global silver consumption in the photovoltaic sector reaching 7,560 tons in 2025, accounting for 55% of total demand, double the amount in 2022; demand from new energy vehicles and AI servers was also growing, with industrial demand increasing by 13% year-on-year in 2025.

Supply side: Global silver supply has been in deficit for five consecutive years, with a projected shortage of approximately 3,660 tons in 2025. In 2026, China will implement a "one-by-one review" system for silver exports, and since 60%-70% of global refined silver depends on China, this will further tighten supply expectations. Furthermore, 70%-80% of silver comes from copper, lead, and zinc co-production mines, making it difficult for independent silver mines to rapidly expand production. Strikes in major producing countries and declining ore grades are exacerbating supply constraints.

Inventory side: Approximately 80% of LBMA inventory is locked up in ETFs or considered ineffective inventory. Inventories in key markets such as the Shanghai Futures Exchange are at historically low levels, leading to expectations of short squeezes and price increases due to tight supply.

Geopolitics and funding: Rising risk aversion combined with speculative sentiment, amplified volatility:

Geopolitical events, such as the US raid in Venezuela, triggered safe-haven buying, leading to a cumulative increase of 9.72% in spot silver prices during the first week of January, with a single-day gain exceeding 6%.

Data shows that net speculative long positions in COMEX silver remain high, and the influx of capital is reinforcing the wealth effect. Even after the CME Group raised margin requirements three times (the latest increase being 28.6% in January), speculative enthusiasm has not significantly cooled down.

Policy and structural factors: strategic attributes and short-term catalysis:

Silver has been added to the U.S. list of critical minerals, leading to market expectations of increased strategic reserve demand; Chinese export controls are exacerbating global supply shortages, with only 44 companies receiving export licenses, and the "one-by-one review" process is increasing global circulation costs.

Futures settlements and index rebalancing (such as the reduction of precious metals weighting in the Bloomberg Commodity Index) triggered short-term volatility, but strong fundamentals supported a rapid return of capital, driving an upward trend against the prevailing market direction.

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