Silver Retreats as XAG/USD Slides and Ratio Eases

Key Moments

Spot Price Action

Silver prices (XAG/USD) moved lower on Wednesday, based on FXStreet data. The metal is quoted at $63.99 per troy ounce, a decline of 2.11% from the $65.37 level recorded on Tuesday.

Since the beginning of the year, silver prices have dropped by 9.98%, underscoring a notable pullback in the precious metal.

Current Silver Price Levels

The table below summarizes the latest silver pricing in U.S. dollars across common units of measure:

Gold/Silver Ratio Moves Lower

The Gold/Silver ratio – which reflects how many ounces of silver are needed to match the value of one ounce of gold – stood at 64.93 on Wednesday. This is slightly below Tuesday’s reading of 65.18, indicating a modest relative shift in favor of silver versus gold.

Investor Interest in Silver

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.

Key Drivers of Silver Prices

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.

Industrial Demand and Economic Cycles

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.

Relationship with Gold

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.