The silver price has yet to recover from its drop at the start of April, whereas the gold price is surging from record to record, with the increase gaining momentum recently.
The current silver price of just below $33 per troy ounce represents a 4% decrease from its five-month high, which was reached at the end of March.
This indicates that while silver is still relatively valuable, it has experienced a slight decline in price in recent weeks.
Investors and traders may be monitoring this trend to determine whether this is a temporary fluctuation or a sign of a more significant price correction in the silver market.
Carsten Fritsch, commodity analyst at Commerzbank AG, said:
The significantly weaker price performance of silver compared to gold is also reflected in the sharp rise in the gold/silver ratio.
The ratio exhibited a steady increase, surpassing the 100 mark at the beginning of April for the first time in almost five years.
This upward trend persisted, culminating in a peak value of 107 on Tuesday. This peak value had not been observed since the height of the coronavirus pandemic in May 2020, indicating a significant development in the metric being tracked.
Silver is therefore extremely cheap compared to gold.
“We attribute this to the sharp price increase in gold, which is currently outperforming all other commodities and asset classes,” Fritsch said.
“If you compare the price performance of silver with that of crude oil, copper, US equities or US bonds, silver performs better. Therefore, silver’s performance is not that bad after all.”
Silver may face headwinds
Silver prices on COMEX rose earlier on Wednesday from losses in the previous session.
Prices on COMEX were largely flat at $32.870 per ounce at the time of writing.
“However, prices of grey metal faced headwinds as investor optimism grew over the Federal Reserve’s (Fed) independence,” Akhtar Faruqui, editor at FXstreet, said in a report.
US President Donald Trump helped calm markets by clarifying he has no intention of removing Fed Chair Jerome Powell, stating:
The press runs away with things. No, I have no intention of firing him. I would like to see him be a little more active in terms of his idea to lower interest rates.
Market sentiment further got a boost from US Treasury Secretary Scott Bessent, who expressed optimism about a resolution to the ongoing tariff dispute with China, calling it “unsustainable”.
Bessent hinted that a deal was possible during a private JP Morgan Chase & Co. event in Washington, although formal discussions have not yet commenced.
Industrial demand lags
“The fact that silver cannot keep pace with gold is explained by the importance of industrial demand, which is developing less dynamically than previously expected,” Commerzbank’s Fritsch said.
The Silver Institute has revised its forecast for industrial applications demand last year downwards by 20 million ounces to 680 million ounces, compared to the November 2024 forecast.
In addition, the Institute expects a slight decline in demand this year to 677 million ounces.
The total silver demand is projected to decrease by 1.4% to 1.15 billion ounces due to stagnant industrial demand and a decline in demand for jewellery and silverware.
Despite the projected decrease, this figure would still represent a record high.
Fritsch added:
Slightly higher demand for bars and coins cannot prevent the decline in demand.
The silver supply deficit is projected to decrease to 118 million ounces this year. This is due to a slight increase in silver supply. This will be the fifth consecutive year of supply deficit; however, it will also be the smallest deficit in four years.
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