The skyrocketing silver price in 2025 has created the conditions to destroy demand among buyers of the precious metal, according to analysts, who say prices could fall even further from last year’s highs.
The metal’s wide range of industrial uses means it is more sensitive to the economic cycle than gold, as an essential component in a variety of products, from computers and mobile phones to solar panels and cars.
Silver’s rise of around 140% last year is deterring buyers in various industries, and its elevated price levels are starting to weigh on demand, UBS said in a May 22 note.
“Demand erosion is likely to continue as long as prices remain at current levels,” they wrote, according to CNBC.
“Unlike gold, which benefits from strong central bank buying, silver lacks this strategic demand anchor and remains absent from the sector’s official reserves. As a result, silver is more sensitive to changes in private investment and industrial demand and is likely to lag behind gold.”
UBS believes the current investment case does not sufficiently reward investors for the associated volatility and as such remains an “unattractive” position for them.
Silver’s extraordinary growth peaked on January 28 this year when it broke through $120 per ounce before a sharp drop of nearly 30% in one day, SEEbiz reports.
Prices have recovered since hitting a 2026 low of $67.60 on March 20, but remain well below pre-Iran war levels.
Both spot silver and silver futures rose in May to around $87 an ounce on May 14, before another selloff saw prices consolidate around $75-78 over the past two weeks.
Spot silver was last seen down 3.7% at around $72.13 an ounce on Thursday, while U.S. silver futures also fell 3.7% to settle at $72.16.
But analysts at HSBC say the metal is “fundamentally overvalued” and could move away from gold in its trajectory.
“We believe further upside is limited as silver remains overvalued in our view,” they wrote in a note published on Thursday.
“Gold prices are likely to remain influential, but we believe the ratio of gold to silver is likely to widen, allowing silver to soften even if gold falls.”
Macquarie analysts also don’t see much room for silver prices to recover.
Its strategists believe the Federal Reserve will raise interest rates in the first half of 2027, reducing pressure on precious metal prices.
“While we expect average silver prices to remain around this level for the rest of the year, volatility will remain until the situation in the Middle East resolves, with significant downside risk if the macro situation deteriorates further,” Macquarie analysts wrote in a May 21 note.
