Silver Prices Decline After Historic Rise... A Healthy Correction Paves the Way for a New Round of Rallies

Silver prices in local and global markets fell during last week's trading after record gains that brought the white metal to its highest level in modern history, influenced by the rise of the dollar, profit-taking operations, and a relative improvement in demand for high-risk assets, according to a report issued by the "Safe Haven Research Center."

The report clarified that silver prices locally dropped by about 9% during the week, with the 800-carat gram declining from EGP 81 to EGP 74. The 925-carat recorded about EGP 86, and the 999-carat reached EGP 93, while the price of a silver pound stabilized at EGP 688. Globally, the ounce fell to the level of $49 after having jumped to $55 on October 16, which was the highest price in four decades, before the market was exposed to a natural correction wave after nine weeks of continuous gains.

The report noted that US President Donald Trump's statements about reaching a "fair" trade agreement with China during upcoming meetings between the two sides boosted optimism in the markets and supported the rise of stocks and cyclical commodities, while the dollar stabilized near its highest level in a week with the covering of short positions in metal markets. This increased the cost of silver for holders of other currencies and pressured prices.

"Safe Haven" pointed to unprecedented disturbances in the global silver market, where available London inventories for delivery fell to only about 125 million ounces compared to more than 305 million ounces two years ago, in addition to the withdrawal of more than 29 million ounces from US Comex exchange warehouses within two weeks, reflecting a severe bottleneck in physical supplies. This is due to the expansion of industrial demand, especially in the solar energy sector, which has become the main driver of global silver consumption, with demand exceeding supply by more than 678 million ounces since 2021, according to data from the Silver Institute.

The report confirmed that the recent decline in silver does not represent a shift in trend but is a "healthy correction" to shake out speculators after a rise exceeding 45% in a short period, while the fundamental factors that led the rally are still in place, foremost among them supply shortages and the ongoing global shift towards clean energy, in addition to central banks' tendency to strengthen their gold and silver reserves as part of reducing reliance on the dollar. This provided a strong boost to investment demand for precious metals.

Regarding US monetary policy expectations, the report indicated that markets are anticipating a near-certain interest rate cut of 25 basis points during the Fed meeting at the end of October, with expectations of another cut next December. This will enhance the attractiveness of silver and gold as non-yielding assets and reduce the opportunity cost of holding them. The continuation of the US government shutdown and the delay in issuing important economic data further complicate the scene, supporting the trend towards safe havens with inflation remaining above the Federal Reserve's 2% target.

The "Safe Haven" center added that the current phase is transitional, as the market enters a period of consolidation in preparation for a new round of expected rises starting in early 2026, supported by the ongoing supply crisis, the recovery of industrial demand, and increasing geopolitical risks associated with the Russian-Ukrainian war and global trade tensions. It explained that any additional decline will be limited given the shrinking physical inventories globally and supply pressures in both London and New York.

The report concluded by emphasizing that "the recent correction is an opportunity to rebuild buying positions, not the beginning of a bearish reversal," pointing out that silver will remain among the best-performing assets in the coming phase as markets remain in a circle of uncertainty and the return of global accommodative policies, thereby supporting the continuation of the upward trend for precious metals over the next two years.