Silver Holds Top Spot Despite 48% Correction From Peak

Despite a 48% correction from its peak in January, silver remains the top performer among major asset classes over the past five years, delivering a 27% compound annual growth rate (CAGR), according to research by 1 Finance. This surpasses gold's 25% CAGR and outpaces equities at 17%. However, investors are wary of higher US interest rates, which could further pressure silver prices.

The white metal has been under pressure since its surge in January amid soaring oil prices and concerns over rate hikes. It peaked at $122 that month but has corrected to current levels. This downturn is largely due to worries about potential rate hikes by the Federal Reserve, with some policymakers advocating for a hike despite the central bank's decision to keep rates steady.

Another factor contributing to silver's decline is demand destruction at elevated prices. Unlike gold, silver has significant industrial demand components in sectors such as solar panels, semiconductors, and electric vehicles. When prices rise too quickly, these buyers may delay or reduce their purchases, creating short-term market pressure.