Silver bars are stacked at the Perth Mint refinery operated by Gold Corporation in Perth, Australia, on February 5, 2026.
Matt Jelonek | Bloomberg | Getty Images
Analysts say silver’s ferocious rally in 2025 is creating a demand-destroying situation among buyers of the precious metal, which could push prices further down from last year’s highs.
The metal’s wide range of industrial uses means it is more susceptible to business cycles than gold as an essential component in a variety of products, from computers and mobile phones to solar panels and cars.
UBS said in a May 22 note that the rise in silver prices, which rose about 140% last year, has deterred buyers across a variety of industries, and rising price levels are starting to weigh on demand.
“As long as prices remain at current levels, the decline in demand is likely to continue,” they wrote.
“Unlike gold, which benefits from strong central bank purchases, silver lacks this strategic demand base and remains absent from government sector reserves. As a result, silver is more vulnerable to changes in private investment and industrial demand and is likely to lag gold.”
Year-to-date trends in COMEX silver futures.
UBS believes that current deals do not adequately reward investors for the associated volatility and remain in an “unattractive” position for investors.
Silver’s impressive rally peaked on January 28 of this year, when it hit $120 an ounce before crashing almost 30% in one day.
Prices have recovered since hitting a 2026 low of $67.60 on March 20, but remain well below pre-Iran war levels.
Spot silver and silver futures both rose in May, trading around $87 an ounce on May 14, but have since fallen again, with prices consolidating around $75 to $78 over the past two weeks.
spot silver It was last trading 3.7% lower at around $72.13 an ounce on Thursday, compared to last month’s U.S. silver futures The stock also fell 3.7% to settle at $72.16.
But analysts at HSBC say the metal is “fundamentally overvalued” and its trajectory could deviate from that of gold.
“In our view, silver remains overvalued and further upside potential is limited,” they said in a note released Thursday.
“While the influence of gold prices is likely to continue, we believe the gold-to-silver ratio is likely to widen and silver is likely to ease even as gold rises.”
Analysts at Macquarie also see little room for silver prices to recover.
The strategists believe the Federal Reserve will raise interest rates in the first half of 2027, increasing downward pressure on precious metal prices.
“While we expect average silver prices to remain around these levels for the remainder of the year, volatility remains until the Middle East situation is resolved, with significant downside risks if macro conditions deteriorate further,” Macquarie analysts said in a May 21 note.
