Silver Drops While Gold Climbs: Uncovering the Reasons Behind Their Divergence

As of Wednesday, September 17, 2025, silver was priced at $31.00 per ounce, retreating from the previous session's one-month peak of $32. This downward move demonstrates a continued trend of silver lagging behind gold, which has benefited from heightened momentum due to ongoing global economic and geopolitical uncertainties. Experts point to a mix of reasons for this gap, such as evolving demand patterns, central bank policy decisions, and the metal's use in industry.

Silver's industrial demand has faced headwinds, especially in China, where excess capacity in the solar panel industry has prompted authorities to introduce self-regulation initiatives. These steps are designed to restrain supply and may dampen industrial silver consumption prospects in the near term. Furthermore, the risk of a yuan devaluation in response to U.S. tariff threats adds another layer of complexity to silver's demand outlook, given China's prominence as a leading exporter.

An anticipated 25-basis-point interest rate reduction by the U.S. Federal Reserve next week—following recent cuts by the European Central Bank, the Bank of Canada, and the Swiss National Bank—could lend some stability to silver prices. Nevertheless, the overall monetary policy picture remains unclear, as investors assess the effects of differing strategies among major central banks. Looking forward, some analysts expect silver to reach $32.15 per ounce by the quarter's close, with projections for a 12-month target as high as $34.69.

The gold-to-silver ratio, which measures the relative value of the two metals, is currently about 87—significantly above its typical historical range of 40 to 60. This high ratio implies that silver may currently be undervalued and could potentially outperform gold if market conditions improve. Still, such a change would hinge on factors like a resurgence in industrial demand and a reevaluation of silver's position within diversified investment portfolios.

Traders are also paying close attention to developments surrounding trade tariffs, as negotiations between the U.S. and major partners such as China, India, and Mexico remain unresolved. While gold has historically experienced price swings in response to tariffs, silver’s reaction has been less pronounced, given its stronger ties to industrial consumption and its lesser status as a safe-haven asset. However, some experts contend that silver’s uses in sectors like renewable energy and electronics could fuel more robust demand growth over the medium term.

To sum up, although silver is still trading below its 2011 record high of $49.51 per ounce, it has advanced 28.21% since the start of 2024, based on CFD statistics. With both optimistic and pessimistic views circulating, the market remains attentive to factors such as industrial demand, decisions by central banks, and geopolitical events, all of which are likely to steer the direction of silver prices in the near future.