(Kitco News) - Easing economic fears in the global marketplace continue to affect safe-haven demand for precious metals, but one research firm says the shifting sentiment could provide new momentum for silver.

While gold has seen an unprecedented rally this year with prices reaching an all-time record high of $3,500 an ounce last week, silver has lagged significantly behind. The gold-silver ratio is currently holding at an elevated level of around 100 points. Spot gold last traded at $3,318.50 an ounce, roughly unchanged on the day; at the same time, spot silver last traded at $33.06 an ounce, also unchanged on the day.

Analysts have noted that gold has significantly outperformed silver as investors try to navigate President Donald Trump’s unpredictable trade policies, hedging against economic chaos and geopolitical uncertainty. Meanwhile, more than half of global demand for silver comes from industrial consumption, which has slowed due to global trade uncertainty.

Although silver is struggling to find firm footing above $33 an ounce, Matt Bauer, Commodity Strategist at Ned Davis Research, said the precious metal is deeply oversold relative to gold and moderately oversold on an absolute basis over intermediate timeframes.

Bauer noted that, according to NDR sentiment indicators, sentiment in silver dropped to its lowest level in more than a decade at the start of the month.

“Sentiment has since started to rebound, though it has not yet cleared the neutral hurdle. A return to neutral would open the door to additional advances,” he said. “While sentiment towards silver is depressed, gold sentiment cannot go any higher. This has created a spread between the two measures that has only been wider a handful of times.”

Although President Trump’s global trade war has dampened economic activity, Bauer said that peak uncertainty could bode well for silver.

“The haphazard rollout and punitive nature of U.S. tariffs pushed the Global Economic Policy Uncertainty Index’s 12-month point change to its highest level ever—eclipsing even the rise seen during COVID,” he said. “However, given silver’s dual nature as a precious and industrial metal, a return to normalized policy, which allows for additional confidence in growth, would likely benefit silver more.”

At the same time, Bauer said that expected interest rate cuts could also support silver prices through the rest of the year. As uncertainty weighs on economic growth, markets are currently expecting the Federal Reserve to cut interest rates four times this year, with growing expectations of a rate cut in June.

“For most of this century, silver has shown an inverse correlation to the USD. The expansion of money supply, pressuring the USD, should boost the metal,” he said. “Returning to expansionary policy would support the uptrend for precious metals.”

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