Silver falls 5%: Can the downtrend continue? 

Synopsis: Silver, often referred to as the “Devil’s Metal,” has recently been in the spotlight after experiencing a sharp 5% decline. In this article, we’ll examine the factors behind this sudden drop. Additionally, we’ll discuss the reasons why this decline might continue in the near term.

Silver has been one of the biggest market surprises of last year, and it is often called the “Devil’s Metal” because of how unpredictable it can be. It has shocked investors by jumping close to 150% last year and hitting new all-time highs in the global market.

It’s risen much faster than gold, even though gold itself climbed above $4,000 an ounce, and has outperformed nearly every other major commodity. In this article, we examine the reasons behind silver’s recent 5 percent fall and explore why the downtrend may not be over, with potential for further declines.

Silver Drops 5%: What Triggered the Sudden Fall?

Silver Pulls Back After Tariff Relief Signals: Silver prices edged lower, retreating from Wednesday’s record highs. The dip came after US President Donald Trump temporarily eased concerns over fresh tariffs on critical mineral imports, including silver.

Trump Signals Negotiation: Trump said the US would pursue bilateral agreements to secure critical mineral supplies, holding off on immediate tariffs while keeping the option open. He also floated the idea of import price floors, rather than only percentage-based tariffs, to strengthen domestic supply chains. As a result of these factors, silver prices fell from $93.4 an ounce to $86.1 an ounce. In India, this translated to a drop from Rs. 271 per gram to Rs. 250 per gram.

Here are the 5 Reasons the Decline May Continue

Tariff Uncertainty Eases

Silver could edge lower more as US President Donald Trump temporarily eased concerns over fresh tariffs on critical mineral imports, including silver. Trump said the US would pursue bilateral agreements to secure critical mineral supplies, holding off on immediate tariffs while keeping the option open. 

He also suggested using import price floors, rather than just percentage-based tariffs, to strengthen domestic supply chains. This temporary relief reduced immediate buying pressure, leading traders to reassess the market, and could cause a pullback in silver prices.

Profit-Taking After Rally

Silver has shocked investors by jumping nearly 150 percent last year and hitting new all-time highs in the global market. The earlier surge, driven by a broad rally in commodities, has led some investors to lock in profits. This profit-taking, combined with market caution after such rapid gains, suggests silver could face further downside pressure in the near term.

Fed Rate Outlook Adds Pressure on Silver

Most Federal Reserve officials have indicated they are unlikely to support another rate cut in the near term. A pause in rate reductions tends to strengthen the US dollar and raises the opportunity cost of holding non-yielding assets like silver. 

As a result, investor demand for silver may ease, adding downward pressure on prices. Combined with profit-taking after the metal’s sharp gains and lingering market caution, the Fed’s stance suggests silver could experience further declines in the short term.

Technical Outlook: Silver Overbought

From a technical perspective, silver appears overextended, trading near all-time highs. On the daily chart, the Relative Strength Index (RSI) is above 70, signaling overbought conditions in the global market. This suggests that a short-term correction is likely, and the downward pressure on silver may continue as the market adjusts from these elevated levels.

Reason for the Huge Surge in 2025

The huge silver surge in 2025 was driven by a combination of strong industrial demand, tight supply, macroeconomic factors, and investor behaviour. One of the primary drivers was the rapid growth in industries that rely heavily on silver. 

Sectors like renewable energy, especially solar panels, electric vehicles, and electronics manufacturing required large quantities of silver for conductivity and other applications. This surge in industrial demand significantly boosted silver consumption, adding upward pressure on prices.

At the same time, the silver market faced a structural supply deficit, and mining output struggled to keep pace with rising demand, and inventories at major hubs fell. The imbalance between demand and supply created scarcity, further fueling the price rally.

Investor sentiment added another layer of momentum amid economic uncertainty, geopolitical tensions, and market volatility. Many turned to silver as a safe-haven asset, and both retail and institutional investors increased their exposure through ETFs, futures contracts, and other investment vehicles, driving demand even higher.

Finally, speculative momentum and FOMO (fear of missing out) amplified the surge. As silver prices rose sharply, traders jumped in to capitalize on short-term gains, creating a self-reinforcing cycle that pushed prices even higher.

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