- Silver declined by more than 35% in three sessions within the last week, driven by a perceived hawkish US Fed and Treasury
- While safe haven demand is still there, the current silver price performance is primarily due to strong industrial demand
- Silver will likely outperform gold in terms of returns in 2026 but gold offers more stability
Silver prices have staged a notable comeback this week, surging more than 10% in the past 48 hours after a brutal three-day plunge that erased over a third of its value. This swift reversal prompts consideration of whether the metal can fully recoup its losses.
The Drop, Rebound and What to Expect
The downturn began late January when silver peaked at $121.64 per ounce, only to crater amid forced liquidations, as detailed in CNBC’s coverage. Prices fell sharply to around $80, driven by margin hikes and a stronger dollar following President Trump’s Federal Reserve nomination. Yet, by February 4, spot silver climbed to approximately $89.07, up 6.92% daily.
Silver could likely win back most of what it lost, but expect some ups and downs. The rise has already recovered about half the loss, thanks to demand and people buying the dip. ING Think sees the drop as a reset, not a long-term fall, with potential for gains from central bank buying. Still, things like higher interest rates or tariffs could limit gains, as CNBC mentioned. Overall, the basics point to a possible move toward $100 or higher if industry demand remains strong.
Safe-Haven or Industrial Demand?
The price increase seems to be from both safe-haven buying and solid industry demand. Worries about global issues and the economy have boosted safe-haven buying. The silver price crash last week happened due to the nomination of Kevin Warsh as the next Federal Reserve Chair. Markets saw Warsh as someone who would raise rates, which led to a stronger dollar and a quick unwinding of silver positions.
However, the 10% rebound we are seeing this week suggests that the fundamentals haven’t actually changed. Industrial demand is still a major factor. Silver’s use in solar panels, AI, and electric vehicles keeps widening supply shortages.
Silver vs. Gold in 2026: Who Will Win?
If you’re choosing between the two, it’s a battle of stability versus velocity. Gold has remained steady, and J.P. Morgan Global Research predicts gold will average around $5,055 per ounce by late 2026, driven by central bank activity. Silver is the riskier option. The Gold-to-Silver Ratio, which rose during the recent crash, is starting to narrow again.
Bank of America forecasts gold at $4,538 per ounce for 2026, while silver could reach $135-$309 in good scenarios. If you’re an investor who is prepared to take risks, silver might be suitable. If you prefer stability, gold is a wiser choice.
Silver Price Prediction
The XAG/USD pair pivots at $83.30 and will likely encounter initial resistance at the 20-day EMA level at $91.57. Stability above that level could enable the bulls to target $95.00 . The RSI is at 50.94, signaling that the momentum could yet swing to the downside. In that case, silver price support will likely be at the psychological $80.00. Action below that level will invalidate the upside narrative and potentially trigger an extended decline to test the previous breakout level near $76.
XAU/USD on the daily chart on February 4, 2026 with key levels of support and resistance. Created on TradingView
The surge stems from bargain hunting after its initial drop and stabilizing sentiment, blending safe-haven demand with industrial fundamentals like solar and AI usage
While geopolitical tensions provide safe-haven support, the primary floor is industrial. High demand for AI infrastructure and solar energy creates a structural supply deficit that prevents prices from staying low for long.
Gold is safer for wealth preservation, backed by central banks. Silver has bigger return potential due to its industry uses and smaller market, but it’s much more volatile.