Silver experienced a dramatic rally in 2025, with prices surging approximately 140% and peaking at over $120 an ounce on January 28, 2026, before crashing nearly 30% in a single day [1]. This sharp increase has led to demand destruction among industrial buyers, as noted by UBS analysts, who warn that elevated price levels are deterring purchases across sectors such as electronics, solar panels, and automobiles [1]. UBS stated, 'The demand erosion is likely to persist as long as prices remain at current levels,' and described silver as an 'unappealing' investment due to its volatility and lack of strategic demand anchors like central bank reserves, which benefit gold [1].
Following the crash, silver prices hit a low of $67.60 on March 20, 2026, before recovering to around $87 an ounce in mid-May. However, another selloff brought prices down to the $75-78 range over the past two weeks, with spot silver last trading at $72.13 an ounce, down 3.7% on the day, and U.S. silver futures settling at $72.16, also down 3.7% [1].
HSBC analysts described silver as 'fundamentally overvalued' and expect it to diverge from gold, with limited upside potential. They anticipate the gold:silver ratio will widen, allowing silver prices to ease even if gold rallies [1]. Macquarie analysts echoed this sentiment, seeing little scope for a recovery and predicting that average silver prices will remain around current levels for the rest of the year, with continued volatility tied to geopolitical risks in the Middle East and potential downside if macroeconomic conditions worsen. Macquarie also forecasts that the Federal Reserve will hike interest rates in the first half of 2027, which could exert further downward pressure on precious metals [1].
CONCLUSION
Analysts from UBS, HSBC, and Macquarie agree that silver's recent rally has led to demand destruction and that the metal remains overvalued, with limited prospects for a near-term recovery. Ongoing volatility and downside risks are expected, especially if macroeconomic or geopolitical conditions deteriorate further.