Silver price pulls back from record high as safe-haven demand wanes
- Silver price pulls back after posting a fresh record high near $94.
- A relative easing in geopolitical tensions temporarily reduces safe-haven demand.
- Expectations of a restrictive US monetary policy cap near-term upside potential.
Silver (XAG/USD) trades around $91.70 per ounce on Thursday at the time of writing, down 1.70% on the day, after having reached a new all-time high close to $94 earlier in the day. The white metal is correcting from recent record levels amid profit-taking and a partial retreat in safe-haven demand.
The pullback in Silver comes as some geopolitical concerns ease. US President Donald Trump said that reports suggest Iran-related crackdown killings are easing and that no mass executions are planned. These comments have helped calm, at least temporarily, fears of a direct military escalation, reducing the appeal of safe-haven assets such as Silver.
At the same time, the non-yielding metal remains under pressure from stronger-than-expected US macroeconomic data, which reinforces the view that the Federal Reserve (Fed) could keep interest rates unchanged in the coming months. This outlook supports the US Dollar (USD) and weighs on precious metals, including Silver, which are sensitive to movements in real yields.
On the political front, the lack of immediate new tariff measures on critical mineral imports announced by the US administration has also helped ease trade tensions, limiting defensive demand for Silver.
Despite the current correction, the medium-term backdrop remains constructive. According to analysts at OCBC, Silver has posted strong gains since the start of the year, supported by persistent supply deficits, solid industrial demand, and spillover strength from Gold. These structural factors are helping keep XAG/USD anchored near historically elevated levels, even as short-term consolidation phases remain likely.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Author
Ghiles Guezout
FXStreet
Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.
