Silver Hits Record $90 as Fed Scrutiny and Inflation Fears Grip Markets
Market Snapshot
- 📈 Silver: $90.74 (+4.41%)
- 📈 Gold: $4,636 (+1.10%)
- 📈 Bitcoin (BTC): $95,550 (+4.75%)
- 📈 Ethereum (ETH): $3,334 (+7.84%)
- 📈 FTSE 100: £10,164 (+0.16%)
- 📈 Oil (WTI): $62 (+1.13%)
- 📉 S&P 500: 6,934 (-0.19%)
- 📉 DOW: 49,192 (-0.80%)
- 📉 NASDAQ: 23,710 (-0.10%)
US Economy & Federal Reserve Under Scrutiny
Investor sentiment is being shaped by several major domestic factors: persistent inflation, unprecedented political pressure on the US central bank, and the lingering risk of tariffs. The latest Consumer Price Index (CPI) report for December showed that headline inflation remained steady at 2.7% year-over-year. Core inflation, which excludes volatile food and energy costs, held at 2.6%.
While the year-over-year core figure matched the previous month, it came in slightly lower than economists had forecast. This has created a mixed outlook; some investors believe it gives the Federal Reserve justification to avoid further interest rate cuts, while others, particularly in the crypto markets, see it as a positive sign for future easing. The figures were driven higher by costs for housing and specific groceries like coffee and lettuce. Investors are now awaiting the upcoming Producer Price Index (PPI) report for a fuller picture of wholesale price pressures.
Compounding this economic uncertainty is the criminal investigation into Federal Reserve Chair Jerome Powell over a headquarters renovation. This has raised serious questions about the central bank's independence, a cornerstone of modern economic policy. In response, leaders from the European Central Bank, Bank of England, and Bank of Canada issued a joint statement of solidarity with Powell.
However, ongoing political attacks from the White House continue to unnerve markets. JPMorgan CEO Jamie Dimon warned that political interference could cause inflation and interest rates to rise in the long term. These concerns are amplified by risks from US tariff policy, with analysts noting that while companies have largely absorbed these costs so far, continued instability could erode their ability to manage them.
AI Reshapes the Technology Sector
A significant strategic shift is underway in the technology sector, as the focus of artificial intelligence moves from building foundational infrastructure to developing and monetising real-world applications. This pivot is evident across major industry players.
The Race for AI-Driven Commerce
Google has launched an open-source Universal Commerce Protocol, creating a standardised way for retailers to integrate with AI shopping tools. It has already secured partnerships with major companies including Shopify, Target, and Etsy. The move is seen as an attempt to outmanoeuvre competitors like OpenAI, whose own checkout features have faced a slower rollout. By building advertisements directly into its AI shopping flow, Google aims to convert chatbot queries into revenue streams.
From Metaverse to Wearables
Meta Platforms is significantly scaling back its metaverse ambitions, cutting over 1,000 jobs (around 10%) from its Reality Labs division, which has incurred losses of over $70 billion since 2021. As part of the pivot, the company is also closing a number of its virtual reality (VR) game studios. The company is now shifting focus towards more commercially viable AI-powered wearables. Its partnership on Ray-Ban smart glasses is reportedly performing better than expected, and the company is exploring other hardware like earbuds and watches to secure users for its large language models. The strategy is not a complete exit from VR, however, as Meta is reportedly trying to recruit developers from platforms like Roblox to build experiences for its Horizon Worlds ecosystem.
Software's Next Wave
Wall Street analysts suggest that after a year dominated by chipmakers, software companies are poised to capture the next wave of AI-driven growth. Firms like Microsoft, Oracle, and ServiceNow are expected to benefit as the industry moves towards application and orchestration layers. Goldman Sachs estimates that AI could expand the total addressable market for software by approximately 30% through 2037.
Addressing Power Consumption
As the AI boom drives a surge in electricity demand for data centres, tech companies are facing pressure to cover the associated infrastructure costs. In response, Microsoft has pledged that the power costs for its AI data centres will not be passed on to the local communities where they operate, and it will not seek property tax breaks for these facilities.
Commodities Rally Amid 'Debasement Trade'
A significant rotation into hard assets is underway, with investors seeking tangible stores of value amid concerns over currency debasement and central bank stability. This trend has pushed both precious and industrial metals to new highs in a rare synchronised rally.
Precious Metals Surge
- Silver: The standout performer, silver surged past $90 per ounce for the first time in history, marking a jump of over 5%. Over the past year, its price has climbed nearly 150%.
- Gold: The traditional safe-haven asset also reached a new all-time high, trading at approximately $4,645 per ounce. Some analysts predict it could reach $5,000 by April.
This flight to precious metals is being interpreted as a demand for "political insurance" against the potential fallout from the investigation into the Fed Chair.
Industrial Metals Follow Suit
The rally is not confined to precious metals. Tin prices jumped 6% following Indonesia's crackdown on illegal mining, which has severely restricted exports. Meanwhile, copper is trading near record levels above $6 per pound, partly driven by traders hoarding inventory in response to a 50% US tariff on copper products. This broad-based strength in commodities signals a deep-seated lack of confidence in traditional fiat currencies and financial systems.
Global Trade and Geopolitical Flashpoints
Global markets are navigating a complex landscape marked by record-breaking trade figures from China and escalating geopolitical tensions centred on Iran and the Arctic.
China's Record Trade Surplus
China reported a historic annual trade surplus of $1.19 trillion for 2025, a 20% increase from the previous year and the first time it has surpassed the $1 trillion mark. This was achieved despite significant US tariffs. The data reveals a strategic pivot in China's trade relationships; while exports to the US fell by 20%, shipments to Africa and Southeast Asia grew by 26% and 13%, respectively. The composition of exports also shifted towards higher-value goods, with semiconductors and vehicles both seeing growth of over 20%. However, with imports growing by a mere 0.5%, the figures suggest weak domestic consumer demand, forcing Beijing to export its excess capacity.
Iran's Economic Collapse and Market Impact
Iran is experiencing a severe economic crisis, with its currency, the rial, collapsing 84% over the last year. This has led to 72% food inflation, sparking widespread protests that have been met with a deadly government crackdown and a near-total internet blackout. The instability has added a risk premium to energy prices, with Brent Crude rising to its highest level since October at $65 a barrel. The US administration has escalated economic pressure by announcing an immediate 25% tariff on any country doing business with Iran, aiming to isolate the regime. Reinforcing this stance, the White House announced it had "cancelled all meetings" with Iranian officials, promising that help for protestors was on its way and that the meetings would not resume until the violence ends.
US-Denmark Tensions Over Greenland
A new geopolitical risk has emerged concerning the US administration's expressed desire to acquire Greenland, a semi-autonomous territory of Denmark. The pressure has been met with firm rejection from Danish and Greenlandic officials. The situation has raised concerns among allies about the potential for further fraying of the NATO alliance, should the White House continue to press the issue.
Corporate Sector Highlights
Several major companies made headlines with significant strategic moves, acquisitions, and earnings reports.
Media & Entertainment
Netflix is now reportedly considering altering its $82.7 billion offer for Warner Bros. Discovery to be an all-cash bid of $27.75 per share. The move is seen as a tactic to expedite the sale and counter a rival hostile bid from Paramount Skydance. Paramount has filed a lawsuit seeking more financial information. The plan still involves spinning off legacy cable networks like CNN into a separate entity.
Banking & Finance
The fourth-quarter earnings season for US banks has delivered mixed results. Bank of America and Citigroup both reported figures that beat Wall Street's expectations. Wells Fargo, however, came up short on its revenue forecasts.
JPMorgan Chase saw its shares fall 4% despite reporting a record annual income of $57 billion. While Q4 results were boosted by a 40% surge in equities trading revenue, investment banking fees disappointed. Investor caution was also attributed to higher-than-expected costs associated with its acquisition of the Apple Card portfolio. Furthermore, the bank's CFO confirmed it would push back against a White House proposal to cap credit card interest rates at 10%, stating that "everything's on the table" to protect shareholder value. Investors will be watching for reports from Goldman Sachs and Morgan Stanley next.
Retail Sector in Crisis
Iconic luxury retailer Saks Global has filed for Chapter 11 bankruptcy protection after running out of cash. The 159-year-old business will now attempt to reorganise its operations and debts to find a buyer. As part of the filing, the company has secured around $1.75 billion in financing and has appointed former Neiman Marcus CEO Geoffroy van Raemdonck to lead the company.
Technology and Defence
- Google: The technology giant is reportedly moving the manufacturing of its high-end Pixel smartphones to Vietnam. The move aims to diversify its supply chain and scale production more efficiently.
- L3Harris: The defence contractor's shares rose after the Pentagon announced a $1 billion investment to help spin off its missile technology division. The capital is intended to secure the supply chain for key systems like Tomahawk and Patriot missiles, with the government receiving preferred stock in exchange.
Consumer Goods
Diageo, the world's largest spirits maker, is reportedly considering the sale of its Chinese spirit brands. The move comes after the company, which owns brands like Guinness and Johnnie Walker, experienced double-digit losses in China during 2025 due to tariffs and shifting consumer preferences.
Cryptocurrency Market Update
The cryptocurrency market saw a bullish turn, largely in response to the US inflation data. Traders interpreted the steady CPI figures as increasing the likelihood of future interest rate cuts by the Federal Reserve, which is generally seen as a positive catalyst for risk assets like crypto.
- Market Movers: Bitcoin (BTC) surged past the $95,000 level for the first time in weeks.
- Regulation: A bipartisan market structure bill is set to proceed to a vote in the US Senate. The draft legislation aims to clarify when crypto tokens are classified as securities versus commodities. Notably, it includes a proposed ban on paying interest or yield for simply holding payment stablecoins, while still allowing for activity-based rewards like staking.
- Institutional Adoption: Crypto infrastructure firm BitGo Holdings has filed for a $1.96 billion initial public offering on the NYSE, which will test institutional appetite for crypto equities. In a separate move, BNY Mellon is launching a tokenized cash system focused on improving the efficiency of collateral, margin, and intraday liquidity for financial institutions.
- New Products: 21Shares has listed an exchange-traded product (ETP) on the London Stock Exchange that combines exposure to both Bitcoin and gold, offering UK retail investors a regulated way to access both assets.
- Technical Challenges: Ethereum co-founder Vitalik Buterin issued a warning that decentralised stablecoins still face fundamental challenges related to price oracles, security, and incentive models that must be solved before they can achieve mainstream reliability.
NOTE: This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).