Silver bars are stacked at the Perth Mint Refinery, operated by Gold Corp., in Perth, Australia, Feb. 5, 2026.
Matt Jelonek | Bloomberg | Getty Images
Silver’s breakneck 2025 rally has created conditions for demand destruction among buyers of the precious metal, according to analysts, who say prices could fall further from last year’s highs.
The metal’s wide range of industrial uses means it is more sensitive to economic cycles than gold, as it is a key component in a variety of goods, from computers and mobile phones to solar panels and cars.
An estimated 140% gain in silver prices over the past year has been deterring buyers across a range of industries and its high price levels are starting to weigh heavily, UBS said in a paper published on May 22.
“The erosion of demand is likely to continue as long as prices remain at current levels,” they wrote.
“Unlike gold, which benefits from strong central bank purchases, silver lacks these necessary bases and remains absent from official reserves. As a result, silver is more vulnerable to changes in private investment and industrial demand, and gold is likely to be left behind.”
How Silver Comex futures have fared for the year so far.
UBS believes that the current investment environment does not sufficiently reward investors due to relative volatility, and as such, remains an “unattractive” environment for them.
Silver’s spectacular run peaked on January 28 of this year when it hit $120 an ounce before a massive crash of nearly 30% in one day.
Prices have rebounded since falling in 2026 to $67.60 on March 20, but remain below levels before the Iran war.
Both silver and silver futures rose in May to trade around $87 an ounce on May 14, before another trader saw prices rally around the $75-78 mark two weeks ago.
Silver color It was last seen trading 3.7% lower at around $72.13 an ounce on Thursday, while the previous month in the US. the future of silver also fell 3.7% to settle at $72.16.
But analysts at HSBC said the metal was “very valuable” and could break away from gold on its way.
“We believe further upside is limited as silver remains overpriced, in our view,” they wrote in a note published Thursday.
“Gold prices will likely remain influential, but we believe the gold:silver ratio is likely to increase, allowing silver to ease even with gold rallies.”
Macquarie analysts also see little chance of a recovery in silver prices.
Its strategists think the Federal Reserve will raise interest rates in the first half of 2027, increasing pressure on precious metal prices.
“While we expect silver prices to remain at this level throughout the year, volatility will remain until the situation in the Middle East is resolved, with downside risk if the broader situation continues to deteriorate,” Macquarie analysts wrote in a note published on May 21.
