Silver retreats as profit-taking, US labor data anticipation weigh

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Silver (XAG/USD) trades around $75 on Thursday at the time of writing, down 4.20% on the day, in an otherwise calm market environment.

Silver extends its pullback after failing to hold above Wednesday’s highs, despite a cautious market mood.
Investors temporarily step back from precious metals ahead of the US employment report.
Positioning ahead of US monetary policy decisions fuels short-term profit-taking.

Silver (XAG/USD) trades around $75 on Thursday at the time of writing, down 4.20% on the day, in an otherwise calm market environment. The white metal deepens the corrective move that started after it failed to sustain gains above Wednesday’s highs, even as mild risk-off sentiment fails to provide meaningful support to precious metals.

Silver’s weakness is part of a broader pullback across the precious metals complex, following the gains recorded earlier in the week. Investors appear to be taking rising geopolitical tensions in several regions, including Venezuela, China and the Middle East, largely in stride, shifting their focus instead to upcoming US macroeconomic data.

Silver is under pressure ahead of Friday’s release of the US Nonfarm Payrolls (NFP) report, which is seen as a key input for shaping expectations around the Federal Reserve’s (Fed) monetary policy outlook. Developments in US labor market data remain a major driver for non-yielding assets such as precious metals.

A recent stabilization in the US Dollar (USD) is also adding moderate pressure on Silver, encouraging profit-taking after the strong rally seen in recent weeks. Despite a broadly supportive medium-term macro backdrop, with expectations of monetary easing in the United States (US) still in place, investors prefer to reduce exposure for now and wait for greater clarity.

In the near term, Silver’s direction is likely to remain closely tied to US economic releases and evolving Fed expectations. In the absence of a significant escalation in geopolitical risks, market flows currently favor caution and consolidation following the latest highs.

Silver FAQs

Why do people invest in Silver?

Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.

Which factors influence Silver prices?

Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.

How does industrial demand affect Silver prices?

Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.

How do Silver prices react to Gold’s moves?

Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.