Silver’s importance as an industrial metal and the tight supply situation present a positive backdrop for prices.
However, risks from trade policy and macro sentiment are likely to remain the focal point of pricing, according to ING Group.
Silver prices, after initially plummeting over 7% on Thursday from an all-time high of more than $93 per ounce due to the easing of broad tariff threats, have largely recouped those losses.
At the time of writing, the white metal was just over 1% down.
This rebound suggests that traders are now focusing on and adjusting prices based on the market’s fundamental structural drivers, Ewa Manthey, commodities strategist at ING Group, said in a report.
The recent recovery underscores silver’s well-known volatility, which is typically higher than gold due to its smaller market size and dual role as both an industrial and investment metal.
US President Donald Trump has postponed the implementation of new tariffs on critical mineral imports, which serves to alleviate immediate concerns regarding disruptions to trade.
This weighed on silver prices on Thursday.
Trump’s announcement eases risk
While the Trump announcement eased some immediate policy risk—a factor that had driven silver to unprecedented heights—causing a correction, the metal’s price is still over 25% higher year-to-date.
This persistence highlights the robustness of the market’s underlying dynamics.
Instead of imposing tariffs, the Trump administration announced a shift toward negotiating bilateral agreements with major trading partners to ensure a sufficient supply of critical minerals.
The administration also plans to consider establishing a price floor for imports, with officials scheduled to present their recommendations within 180 days.
Although tariffs have not been entirely eliminated as an option, this change in approach has lessened the immediate risk of trade disruption, according to Manthey.
The decision comes after a months-long Section 232 review, conducted under the Trade Expansion Act, which assessed whether the imports of processed critical minerals pose a threat to US national security.
The tariff review examined a wide range of processed critical minerals (lithium, cobalt, nickel, rare earths, gallium, graphite, platinum group metals, and other industrial metals, including silver) and goods containing them, such as components for EVs, batteries, magnets, and electronics.
Source: ING Research
Historic silver squeeze
The uncertainty surrounding US tariffs had previously caused a historic squeeze by moving a large quantity of physical silver from London to the US.
This movement resulted in a significant reduction of available silver stocks in London, the main trading center, which in turn intensified price fluctuations and market volatility, Manthey said in the ING report.
Driven by both safe-haven investment and strong industrial consumption, silver prices have surged by almost 150% in the last year, significantly outperforming gold.
This strong rally has lowered the gold/silver ratio to just over 50, a level not seen since 2011.
Source: ING Research
Structural supply deficit to limit downside
The silver market is facing a persistent structural supply deficit, exacerbated by factors beyond policy volatility.
Mine supply growth is limited because the majority of silver is a by-product of other metal production, hindering the industry’s ability to swiftly increase output in response to higher prices.
Simultaneously, robust industrial demand from sectors like solar energy, electrification, and electronics is keeping the physical market severely constrained.
“This persistent deficit underpins silver’s bullish case and helps explain why prices have remained elevated despite fluctuations in the speculative risk premium,” Manthey added.
Volatility is likely to remain elevated as silver’s dual role as both an industrial and investment metal continues to drive larger percentage swings than gold, especially given its smaller overall market size.
Prices are likely to consolidate in a range in the near-term as market positioning normalises and the risks associated with tariffs are reassessed.
Silver’s downside potential appears limited, suggesting it will likely remain well-supported when prices fall.
This is due to a combination of persistent structural deficits, constrained physical availability, and continued policy uncertainty, according to Manthey.
Trade policy developments, macro conditions, and any renewed signs of supply disruptions will remain key catalysts.
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