Silver prices dropped on Monday, trading at $75.07 per troy ounce, a decline of 4.29% from $78.44 on Friday. Since the start of the year, Silver prices have surged by 159.84%. The Gold/Silver ratio was 59.48 on Monday, up from 57.77 on Friday. Silver is commonly traded as a precious metal and is often used as a form of currency. Although it’s less popular than Gold, Silver can diversify investment portfolios and protect against inflation. Traders can purchase Silver either physically or through means like Exchange Traded Funds.

Factors Influencing Silver Prices

Many factors affect Silver prices, including geopolitical conflicts and economic downturn fears. Silver tends to rise when interest rates are low and is influenced by the strength of the US Dollar, investment interest, mining supply, and recycling rates. Industrial demand for Silver comes from its use in electronics and solar energy. Economic conditions in the US, China, and India also impact Silver prices, with industrial uses and demand for jewelry being significant. Silver often follows Gold’s trends, and the Gold/Silver ratio helps assess their relative values. A high ratio may suggest that Silver is undervalued or that Gold is overvalued. The nearly 160% increase in Silver during 2025 makes the recent 4.3% decline to $75.07 noteworthy. This pullback likely indicates that traders are taking profits as the year comes to a close. The key question now is whether this is a short-term dip or the beginning of a larger correction.

Gold/Silver Ratio Dynamics

The Gold/Silver ratio rose to 59.48, indicating Gold is currently outperforming Silver. Historically, this ratio has averaged between 60-80 in the 21st century, making today’s level not unusual. However, the swift increase in the ratio suggests that Silver’s impressive rise may have outpaced Gold, allowing for potential pairs trading. The recent weakness in Silver prices seems linked to a stronger U.S. dollar after the Federal Reserve’s last meeting of 2025, where they indicated a more cautious approach to interest rate cuts in 2026. As Silver does not yield interest, it’s sensitive to interest rate expectations. We will closely monitor early economic data for 2026, especially the January jobs report, for signs of this trend. While the long-term demand for Silver in industries remains strong, recent data has shown some softness. The global shift toward green energy led to a 30% increase in solar panel installations in 2025, but recent manufacturing PMI data from major economies revealed a slight decrease in industrial activity. This has prompted some investors to sell during the year-end rally. Given the current volatility and uncertainty, options trading seems vital in the coming weeks. Traders who see this as a chance to “buy the dip” may consider call options to limit risk. Meanwhile, those anticipating a further drop toward the $70 level might look into buying puts to profit from ongoing declines. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now