Silver's dramatic price increase of approximately 140% last year has begun to deter buyers across various industries, leading to concerns about demand erosion. UBS analysts noted that silver's industrial applications make it more sensitive to economic fluctuations compared to gold, which benefits from strong central bank purchases.
As a result, silver lacks a strategic demand anchor, making it vulnerable to changes in private investment and industrial demand. Following a peak of over $120 an ounce in January, silver prices have experienced significant volatility, including a nearly 30% drop in a single day. Currently, prices are consolidating around $75-78 per ounce, with recent trading at approximately $72.13.
Analysts from HSBC and Macquarie express skepticism about silver's valuation, suggesting that it is fundamentally overvalued and may diverge from gold's performance. Macquarie also anticipates that potential interest rate hikes by the Federal Reserve could further pressure silver prices, indicating a challenging outlook for the metal amid ongoing geopolitical tensions