Central Banks Broke the 40-Year Link Between Gold and Silver Prices: Goldman Sachs

• Gains in silver prices are unlikely to catch up to the gold rally, Goldman Sachs analysts wrote.
• Central banks’ gold demand has driven the gold-silver price ratio out of its historical range since 2022.
• Economic uncertainty is fuelling a gold rally. Meanwhile, silver prices face pressure from solar oversupply.

Gold has been on a dizzying rally — but buying silver as an alternative may not be as profitable a move as you think.

The yellow metal is likely to continue outperforming silver thanks to strong demand from central banks, which have been snapping up gold since 2022.

“The price divergence began after the freezing of Russian reserves, which triggered a fivefold increase in central bank gold buying — a shift that does not extend to the more ample and less precious silver,” Goldman Sachs analysts wrote in a note on Monday.

Gold and silver prices are closely linked with the gold-silver price ratio, which measures the ounces of silver needed to buy one ounce of gold and historically trades in a 45-80 range.

However, the ratio has broken out of this range since 2022 and is now around 102, which means that more silver is now required to buy an ounce of gold.

“Central banks broke a 40-year correlation,” wrote the Goldman analysts.

They don’t expect silver prices to catch up with the gold rally as higher central bank gold demand has structurally lifted the gold-silver price ratio.

While the war in Ukraine has lifted gold prices, prices have been on a tear since early 2024 as investors piled into haven assets.

Over the last year, prices of the yellow metal have been supported by demand from China due to the country’s economic downturn and broader uncertainty due to President Donald Trump’s second term in office.

Gold prices hit a historic high above $3,500 per ounce on April 22. Its price is around 28% higher this year to date.

The spot gold price was around $3,370 per ounce at 3:08 a.m. ET on Tuesday after hitting a two-week high of $3,380 per ounce on Monday. Investors are keeping their eyes on the Federal Reserve’s interest rate decision on Wednesday for further cues.

The spot silver price is around $33 per ounce and is about 15% higher so far this year.

Meanwhile, a boom in China’s solar panel production has also slowed, putting pressure on the prices of silver, which is used in its manufacturing.

“With Chinese solar production now slowing amid oversupply, high recession risk, and central bank gold buying remaining strong in 2025, we expect gold to continue outglittering silver,” the analysts wrote.

Goldman’s year-end forecast for gold prices is $3,700 per ounce.