Silver Slides From Peak Amid Safe-Haven Demand

Key Moments

Spot Silver Retreats After Setting Fresh Record

Silver (XAG/USD) pulled back during European hours on Thursday after briefly reaching a new record high of $120.46 per troy ounce. The metal was recently trading near $116.60, easing from its latest peak but still elevated as investors continued to seek perceived safety.

The latest rally in silver has been closely tied to increased safe-haven demand. Market participants have been reacting to ongoing geopolitical tensions and political developments in the United States, which have added to broader risk aversion.

Geopolitics and U.S. Policy Tensions Support Safe-Haven Bid

Geopolitical risk remained in focus after U.S. President Donald Trump urged Iran to return to nuclear negotiations, while warning that any future U.S. strike “would be far more severe.” In response, Tehran threatened retaliation against the U.S., Israel, and their allies, further stoking concerns in global markets.

According to Reuters, Marex analyst Edward Meir highlighted that rising U.S. debt levels and uncertainty stemming from a global trade system that is fragmenting into regional blocs are encouraging investors to move away from a U.S.-centric framework and increase their exposure to precious metals.

Fed Independence Under Scrutiny

Investor attention has also been drawn to developments around the Federal Reserve. Traders are increasingly wary about the Fed’s independence as the Trump administration pursues a criminal investigation into Chair Jerome Powell, seeks the removal of Fed Governor Lisa Cook, and prepares to nominate a successor to Powell in May. These actions have raised questions over the future credibility and predictability of U.S. monetary policy.

Dollar Dynamics and Policy Signals

Demand for precious metals, including silver, has remained robust as the previously strong U.S. Dollar shows signs of losing momentum. This shift has underscored continued hedging demand against currency-related risks.

U.S. Treasury Secretary Scott Bessent reiterated the administration’s commitment to a strong-dollar policy. At the same time, the Federal Reserve left interest rates unchanged in January, citing still-elevated inflation and resilient economic growth.

Fed Chair Jerome Powell noted that job gains have moderated and the unemployment rate has stabilized, adding that the central bank is “well-positioned” to evaluate incoming data on a meeting-by-meeting basis without adhering to a predetermined path for rates.

Market Snapshot: Silver Price Levels

Silver FAQs

Why do people invest in Silver?

Silver is a precious metal that is actively traded by investors. It has historically served as both a store of value and a medium of exchange. While it attracts less attention than Gold, investors may turn to Silver to diversify portfolios, for its intrinsic value, or as a potential hedge during periods of elevated inflation. Exposure can be obtained through physical holdings such as coins and bars, or via investment products like Exchange Traded Funds that track its price on global markets.

Key Drivers of Silver Prices

Silver prices respond to a broad set of influences. Periods of geopolitical instability or worries about a sharp economic downturn can push Silver higher because of its safe-haven characteristics, although typically less strongly than Gold. As a yieldless asset, Silver tends to benefit when interest rates decline.

Because Silver is priced in U.S. Dollars (XAG/USD), the currency’s movements are also crucial. A strong Dollar generally caps Silver’s upside, while a weaker Dollar tends to support gains. Other important factors include investment demand, mining output – with Silver being more plentiful than Gold – and recycling trends, all of which can shift the balance between supply and demand.

Impact of Industrial Demand on Silver

Industrial usage is a major component of Silver demand. The metal is widely employed in industries such as electronics and solar energy, supported by its very high electrical conductivity, which exceeds that of Copper and Gold. A rise in industrial demand can lift prices, while a slowdown typically weighs on them.

Economic conditions in the U.S., China, and India can influence these dynamics. The extensive industrial sectors in the U.S. and especially China consume Silver in various applications, while in India, consumer demand for Silver jewelry plays an important role in price formation.

Relationship Between Silver and Gold Prices

Silver often moves in tandem with Gold. When Gold prices advance, Silver usually climbs as well, reflecting their similar roles as safe-haven assets. The Gold/Silver ratio – which measures how many ounces of Silver equal the value of one ounce of Gold – is sometimes used to gauge their relative valuation.

Some market participants view a high Gold/Silver ratio as a sign that Silver may be undervalued or Gold overvalued. Conversely, a low ratio can be interpreted as indicating that Gold is undervalued relative to Silver. These interpretations can influence trading strategies across both metals.