Silver prices recently hit a high of $54.50 per troy ounce but then fell by nearly 2%. This decline followed a drop in gold prices and an overestimation of silver’s price rise, bringing the Gold/Silver ratio down to below 78. Despite this drop, silver is on track for its highest weekly gain in five months. If it reaches $52, it could also mark its highest weekly close. The International Energy Agency expects electricity demand to rise, which will benefit silver because of its use in power generation and electric vehicles.

Silver’s Current Industrial Demand

Almost 70% of industrial silver demand comes from electrical and electronic applications, according to the Silver Institute. The FXStreet Insights Team shares expert market observations without just repeating headlines. FXStreet also offers insights into various markets, including stocks, currencies, and commodities, along with forecasts and trading advice. They cover movements in indices, currency pairs, gold, cryptocurrencies, and identify potential trading brokers expected to perform well by 2025. After nearly hitting the record high of $54.50 set about a month ago, silver is now pulling back. This reversal indicates strong resistance at these peak levels, creating some uncertainty. Traders should be aware of a possible double-top pattern, which might signal a larger market correction.

Gold Silver Ratio And Market Trends

The price drop was closely linked to a decline in gold, which lowered the Gold/Silver ratio to nearly 78. This ratio is now a key indicator as it approaches the yearly low seen in mid-October. Historically, the average ratio for 2023 and 2024 was much higher, highlighting silver’s current strong performance. Even with this pullback, the long-term outlook for silver remains positive due to strong industrial demand. Recent reports indicate that silver demand for photovoltaics could rise by over 20% by 2025, driven by global energy initiatives. Industrial consumption is now a larger part of overall demand than ever before. On the supply side, reports suggest that mining output from key regions in Mexico and Peru is slightly below third-quarter projections. The latest World Silver Survey data forecasts a growing supply deficit for the third straight year. This supply tightness offers strong support for prices. For traders in derivatives, the heightened volatility near the record high makes options strategies appealing for capitalizing on sharp movements. Given the low Gold/Silver ratio, traders might consider shorting silver against gold as a way to revert to historical norms. However, the strong narrative around industrial demand could justify the new, lower ratio. Those with a longer-term view might see significant price drops as good buying opportunities. The structural demand from electrification and green energy is not just a short-term trend. Using long-dated call options when prices dip below $50 could position traders for the next upward movement. Create your live VT Markets account and start trading now.

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