Silver price has lacked enough bullish momentum to keep up with its shinier cousin, gold. While the metal has found support in its safe haven appeal, the ongoing US-China trade tensions have kept most buyers on the sidelines.
The probable easing of Trump’s tariffs, and a subsequent deal between the US and China would help lower the gold/silver ratio by bolstering silver prices. In the immediate term, the focus is the US trade policy and the country’s economic data.
Silver price struggles to catch up with gold/silver ratio at COVID-19 levels
Gold price has been on a runaway rally in recent months; surging by over 25% since the beginning of the year. About a week ago, the precious metal extended its gains to hit a fresh all-time high of $3,503. While the heightened demand for safe-haven assets has also bolstered silver price, it is still lagging behind.
Since the start of 2025, gold’s less lustrous cousin has been up by about 13%. Earlier in April, it plunged to a 7-month low as Trump’s aggressive tariffs weighed on the financial markets. While it has since rebounded above the crucial support zone of $32.50, it lacks enough bullish momentum to retest the 5-month high hit in March 2025.
Silver price recent struggles have seen gold/silver ratio rise above 100, a level last recorded during the era of COVID-19 in 2020. The ratio indicates how many ounces of silver are needed to buy one ounce of gold. In the current situation, gold price has been skyrocketing while silver price underperforms. As such, one would need more ounces of silver to purchase an ounce of gold.
Since mid-2021, the gold/silver ratio has been hovering between 75 and 90. However, the ongoing economic uncertainties have bolstered gold price to record highs. At the same time, silver’s industrial demand has reduced following Trump’s aggressive tariffs and the subsequent trade tensions between the US and China.
While gold price may continue to shine in its heightened safe-haven demand, silver price has untapped upside potential. Further rebounding will help lower the gold/silver ratio.
A US-China trade deal will be particularly beneficial to the industrial metal. Besides, the global goal of reducing carbon emissions by 45% by 2030 and reading net zero by 2050 is set to bolster the metal’s demand outlook in the medium to long-term.
US dollar records capped gains with focus on jobs data
Investors are optimistic of the easing of Trump’s aggressive tariffs, which has held the dollar index above the support zone of $99. However, underwhelming US economic data has capped its gains; limiting silver price losses.
US GDP preliminary reading for Q1’25 showed the economy contracting by 0.3%; missing the forecasted expansion of 0.4%. At the same time, PCE, which is Fed’s preferred measure of inflation, highlighted increased pressure on prices. The headline PCE came in at 3.6%, up from 2.4% in Q4’24.
As the markets digest the released data, investors are eyeing the jobs report on Friday amid concerns that Trump’s aggressive tariffs will slow economic growth and increase inflation. Ordinarily, silver price moves inversely to the value of the US dollar as a stronger greenback makes the industrial metal more expensive for buyers holding foreign currencies.
Silver price analysis
The daily chart shows that the silver price peaked at $34.87 in December last year. It has now retreated to $32.65 as it continued to underperform gold, which has jumped to a record high.
Silver remains above all moving averages, a bullish sign. However, it has also formed a rising wedge pattern, a popular bearish reversal sign. On the positive side, the wedge pattern has a long way to form, meaning that the reversal may take time to form. Therefore, the most likely scenario is where it remains in a consolidation phase for a while.
The post Silver price points to upside potential as gold/silver ratio soars appeared first on Invezz
