Today's Edition
BATOOL GHAITH (ABU DHABI)
Silver’s price fluctuations over recent weeks reflect the intense volatility gripping global markets, recording intense rises followed by dramatic pullbacks.
The metal’s wild ride during January went from a high of $116 per ounce to a low of around $76 in under a week, which is a drop of nearly 35%.
Speaking to Aletihad, economic analyst Hosam Ayesh explained that silver’s sharp rise happened too fast for the market to handle, leading to a quick correction as prices, returns, and expectations became too inflated.
According to Ayesh, the price increase was higher than what it should have reached at least in the current or last month, driven by a rapid acceleration in both gold and silver prices on the back of major economic and military developments, and on the remarks of US President Donald Trump.
He pointed out that the combination of the threats of a military strike on Iran, the complex relationship between the US and the European Union, in addition to the release of Epstein files, created what he described as a price snowball effect on both silver and gold.
“This led to an unprecedented rise that exceeds the computational and operational logic of gold and silver prices,” Ayesh said.
He indicated that other metals also saw price increases, contributing to what Ayesh called a tsunami in metal prices, as assets that serve as safe havens and those with industrial demand drew additional investor interest.
On the other hand, the subsequent sharp decline occurred because silver is not the primary safe‑haven asset in the way gold is, Ayesh noted. Rather, it is a correlated companion.
“Silver benefited significantly from gold’s rise, sometimes even surpassing it in performance, but that relationship was unsustainable,” he added.
For example, in April of last year, 105 ounces of silver were equivalent to one ounce of gold, whereas by late last month, before the correction, that ratio had collapsed to approximately 50 ounces of silver per ounce of gold, a figure far removed from the traditionally accepted ratio and one that defies silver’s own price logic, Ayesh said.
The sharp drop in silver was a swift reaction to small shifts in the very factors that drove its spike. While interest rate stability and a moment of global calm, from US-Iran tensions to NATO talk, may seem minor, they created space for silver to return to a more balanced level, he explained.
“Prices may settle at current levels and rise again, not in another surge, but slowly and steadily. This is not the end of silver’s bull run, just a sharp pause shaped by the ongoing risks circling the global economy,” Ayesh added.
He also highlighted considerations around the supply dynamics of silver, which is mostly produced as a by‑product of mining for copper, zinc, lead and gold.
For investors, Ayesh emphasised that opportunities to buy remain for those interested in silver, whether as a store of value or a safe‑haven asset, anticipating prices to resume rising again given ongoing geopolitical and economic uncertainties.
However, he stressed the importance of risk management, noting that silver is among the most sensitive metals to sudden market moves, meaning that rapid gains can quickly turn into sharp losses.
Ayesh pointed out that silver experienced one of its largest single‑day price drops in history last month, when it fell more than $20 per ounce, nearly a 35% decline in a single session, before buyers helped it rebound toward $78 and then $85 per ounce.
“Policy decisions by the incoming Federal Reserve chair and broader US economic direction may continue to tilt investor flows toward safe‑haven assets like gold and silver. Traders must decide whether they are buying silver as a store of value and future safe haven, or as a speculative instrument, and manage their positions accordingly,” he said.
Today, silver is trading at around $80 per ounce, as the market waits to see what is next for the metal amid global demand, shifting interest rates, and geopolitical uncertainty.
