Early 2026 Silver Price Outlook: Geopolitical Variables and Policy Changes Intertwined

Recent variables surrounding silver price outlooks are interacting in complex ways. Progress in Russia-Ukraine peace negotiations, China’s export restrictions on silver, and the U.S. Federal Reserve’s interest rate cut prospects are the three main factors shaping the silver market direction. In particular, China’s new regulations implemented since early 2026 and changes in the Fed’s monetary policy stance are significantly impacting silver prices.

Safe Asset Silver Price Volatility: Adjustment with Peace Negotiation Progress

Last week, during the Asian trading session, silver (XAG/USD) prices experienced a temporary correction. The price dropped from a peak of $84.03 to $75.00, reflecting progress in Russia-Ukraine peace talks. Especially after U.S. President Trump and Ukrainian President Zelensky held talks in Florida and announced that a peace agreement was imminent, market expectations of reduced geopolitical risk grew.

This aligns with silver’s role as a traditional safe asset. As peace negotiations advance and international conflicts are more likely to be resolved, investors may feel less need to rely on safe assets. Consequently, demand for precious metals like silver temporarily declines. However, unresolved issues such as territorial transfer and future management of the Zaporizhzhia nuclear power plant mean geopolitical risks are not entirely eliminated.

China’s Silver Export Restrictions: Signal of Global Supply Tightening

China’s export restrictions on silver, starting in early 2026, have introduced a new variable into the global silver market. The policy to limit exports by small-scale exporters and permit only large, government-licensed companies to export has created tension in the international supply chain.

The significance of this regulation is greater than it appears. China accounts for a substantial portion of global silver production, and changes in its export policies directly affect global supply and demand. If export restrictions tighten, actual global silver supply could decrease, exerting upward pressure on prices in the medium to long term. Additionally, since the restrictions target small firms, market entry barriers increase, potentially deepening supply-demand imbalances worldwide.

Impact of Fed Rate Cut Expectations on the Silver Market

The Fed’s rate cut outlook for 2026 is also a crucial factor in silver price forecasts. According to CME FedWatch, market expectations indicate a 73.3% probability that the Fed will implement at least a 50 basis point rate cut.

A rate cut would reduce the attractiveness of dollar-denominated assets. Lower interest yields make investors more inclined to shift toward alternative assets like gold and silver. Since silver is heavily used industrially, a scenario of falling rates coupled with economic stimulus could boost both industrial and investment demand. However, the Fed’s dot plot projects the federal funds rate remaining around 3.4% by the end of 2026, suggesting that a significant rate decrease might only occur once, or not at all.

Silver Price Outlook: Key Factors for Future Volatility

The combined influence of these three factors keeps the silver price outlook uncertain. In the short term, geopolitical tensions easing and safe asset demand waning could exert downward pressure. However, if China’s supply restrictions intensify and the Fed’s rate cuts materialize, investor sentiment and industrial demand for silver could simultaneously improve.

Particularly during a rate cut phase, increased industrial demand driven by economic stimulus could support silver prices. In the medium term, silver prices may have room to rise again. Over the coming months, the final outcomes of peace negotiations, the actual impact of China’s policies, and the Fed’s interest rate decisions are expected to be the three main variables determining silver prices.