Silver has cooled in recent sessions after a very strong run that saw it climb to a 4-week high of US$95.23 per ounce.
The precious metal is currently trading around US$89.87 per ounce. While that marks a noticeable pullback from its recent highs, silver is still up more than 180% over the past 12 months.
That is a remarkable gain for any major commodity and helps explain why some investors may now be choosing to lock in profits.
So, what has changed over the past few days?
Image source: Getty Images
Risk appetite shifts as oil surges
One key factor appears to be a shift in investor focus.
As tensions escalate in the Middle East between Iran, the United States and Israel, oil prices have jumped sharply. Brent crude has climbed toward US$79 per barrel, while West Texas Intermediate has pushed above US$71.
The Strait of Hormuz, which handles a significant share of global oil shipments, has become a central flashpoint. Fears of supply disruptions have driven money into energy markets, with traders positioning for higher crude prices if the conflict widens to include the Gulf states.
Against this backdrop, some capital appears to have rotated out of silver and into oil. While silver can benefit from geopolitical uncertainty, it also has strong links to industrial demand. If concerns about global growth increase, demand expectations may soften and pressure the silver price.
Strong US data and a firmer dollar
Recent US economic data has also weighed on sentiment.
Manufacturing price readings came in stronger than expected, adding to concerns that inflation remains persistent. At the same time, US bond yields have edged higher and the US dollar has strengthened.
That combination has put pressure on precious metals and sparked a short-term pullback after silver's steep rally.
Still a powerful long-term uptrend
Despite the recent weakness, the long-term outlook is still very much positive.
The rally has been supported by firm investment demand, central bank buying across the precious metals sector, and steady industrial use in areas such as solar panels and electronics.
The white metal is still trading well above levels seen in early 2025. Technical support around the US$80 to US$85 range may now become an area investors watch closely.
If you're seeking exposure without holding physical bullion, the Global X Metal Securities Australia Ltd (ASX: ETPMAG) offers one option.
The exchange traded product, which provides access to physical silver, is currently trading at $121.55. Its performance has closely tracked movements in the silver price over the past year.
What next for silver?
In the short-term, silver may remain volatile as markets react to Middle East tensions and shifting US interest rate expectations.
If oil continues to attract attention and bond yields move higher, silver may find it difficult to revisit recent highs. On the other hand, any escalation in geopolitical tensions or softer economic data could see demand for precious metals pick up again.
