Silver Prices Tumble After Record Peak
The precious metal had been shattering records throughout the previous week before diminishing geopolitical tensions and the London Metal Exchange's margin policy adjustments sparked the dramatic selloff.
Opening 2025 at $28.9 per ounce, silver embarked on a sustained rally fueled primarily by US President Donald Trump's tariff agenda, ambiguity surrounding central bank monetary policy trajectories, and international political instability.
The metal surged approximately 25% during the year's first six months, breaching the $50-per-ounce threshold for the first time on October 9. Robust central bank appetite for precious metals, capital flows into exchange-traded funds (ETFs), and mounting projections of Federal Reserve rate cuts propelled valuations skyward.
Silver climbed to $79.3 per ounce on December 26 before reaching Monday's $84 milestone—representing a staggering 150%-plus appreciation from January's opening level. Physical silver prices in China reportedly touched $90 per ounce.
Tuesday's 7.18% collapse brought silver to a $72.8 close. The metal's most severe prior single-day retreat registered 8.21% on February 2, 2021.
News that the Chicago Mercantile Exchange had elevated margin rates for silver futures contracts amplified the downturn.
Following Tuesday's steep correction, silver recaptured partial losses on Wednesday, advancing 2.4% to trade at $74.6 per ounce.
Zafer Ergezen, a futures and commodities markets expert, told Anadolu that the decline in silver could have particularly been driven by the London Metal Exchange's margin increase, noting that silver has experienced similar price drops of up to 10% in the past.
"A similar price movement is expected now," he said. "Following the decision, profit-taking was expected due to margin calls and the re-evaluation of positions."
Ergezen characterized silver's meteoric ascent as setting the stage for an unavoidable technical retracement.
"When we combine the need for correction and profit-taking, we are left with a sharp decline — it is not a surprising move," he said. "What's important in determining where the prices are headed is whether it will be balanced with buyers in a short time and how long these position adjustments will last," he said.
He noted pricing disparities between US and Chinese exchanges stem from China's recent implementation of multiple silver export restrictions.
"Regulators around the world are generally trying to regulate this market to some extent, and what we saw is China's regulation actually led to an increase in the margin," he said. "The demand for physical silver, which is seeing a supply shortage now, led to a slight increase in margin," he added, pointing out that the demand for physical silver was much stronger in the Asia-Pacific region.
"The increased production of electric vehicles, renewable energy, and technology also contributed to the silver demand, as well as platinum and palladium, which is why we're seeing slightly wider margins," he added.
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