Silver Prices Retreat from Historic Highs Amid Continued Upward Momentum

Silver prices have slightly retreated to around $65.8 per ounce, after setting a new record high of $66.175 in the previous session following a strong 3.8% jump, as markets reacted to weaker-than-expected U.S. inflation data.

The data revealed that the core inflation rate in the U.S. recorded its slowest annual growth pace since early 2021, bolstering investor expectations for the Federal Reserve to continue cutting interest rates through 2026. Currently, markets are pricing in a 25% probability of a rate cut in January, with a near certainty of a cut by April, supporting non-yielding precious metals.

At the same time, the geopolitical landscape remained an indirect support factor, with U.S. efforts to halt sanctioned Venezuelan oil shipments following an incident involving the seizure of a tanker and military deployments, alongside ongoing tensions in Ukraine as Russian President Vladimir Putin reiterated regional demands despite intensified U.S. diplomatic efforts.

Annually, silver continues to perform exceptionally, having gained nearly 130% since the beginning of the year, marking its strongest annual increase since 1979, driven by global supply shortages. Estimates indicate that the market will continue to face deficits through 2026, supported by recovering industrial demand and ongoing momentum in solar energy applications, against limited supply growth.

The recent retreat reflects more of a short-term profit-taking than a change in trend, as the fundamental factors supporting silver prices remain intact in the medium to long term.