^{Photo: Bloomberg.com}

Silver tumbles again after short-lived rebound

Silver prices plunged once more on Thursday, erasing a brief two-day recovery and underscoring the extreme volatility gripping the precious metals market. Spot silver fell as much as 16% intraday before settling about 13% lower at roughly $76.97 per ounce, while New York futures dropped more than 8% to around $77.28 per ounce.

The renewed selloff follows one of the most dramatic price swings in silver’s modern trading history. After surging to record highs earlier this year, the metal suffered a near-30% crash last Friday. Despite the correction, silver remains up approximately 146% in 2025, according to LSEG data, highlighting just how explosive the rally had been before momentum reversed.

Market participants say the latest move reflects a market still struggling to digest heavy speculative positioning rather than any sudden change in physical supply or industrial demand.

Speculative flows dominate as leverage unwinds

Analysts widely agree that hedge funds, leveraged traders, and options activity have been the primary forces behind silver’s violent price action.

“You’d seen a lot of speculator positions build up, and I don’t think that excess has been fully flushed out yet,” said Sunil Garg, managing director at Lighthouse Canton. While Garg maintains that silver’s long-term fundamentals remain intact, he cautioned that further volatility is likely until leveraged bets are fully unwound.

Silver plays a critical role across multiple industries, including solar panel manufacturing, electronics, automotive catalysts, medical equipment, and advanced technologies. Structural demand tied to renewable energy and electrification continues to support the broader investment case. However, in the near term, financial flows have overwhelmed those fundamentals.

Adding to the pressure, several global metals exchanges have raised margin requirements following last week’s steep selloff. The CME Group increased margins on silver contracts, making it more expensive for traders to hold leveraged positions.

Higher margins typically force weaker hands out of the market, accelerating liquidations. Garg noted that these changes alone are enough to “kill off some of the speculation,” particularly among short-term traders relying on borrowed capital.

Dealer hedging and stop-losses amplify the drop

Investment banks say mechanical trading dynamics intensified the decline. Goldman Sachs explained that as prices started falling, dealer hedging behavior flipped from buying into strength to selling into weakness.

At the same time, automated stop-loss orders were triggered across trading platforms, leading to forced exits and cascading losses.

“As prices fell, dealer hedging flipped from buying into strength to selling into weakness, investor stop-outs were triggered, and losses cascaded through the system,” Goldman wrote in a midweek note.

The bank also highlighted that silver’s pullback has been sharper than gold’s due to tighter liquidity in the London silver market, which tends to magnify price moves during periods of stress.

Goldman added that the timing of the most aggressive swings suggests Western trading flows were largely responsible, pointing out that many of the steepest moves occurred while Chinese futures markets were closed. This implies the volatility was driven more by U.S. and European investors than by speculative activity in Asia.

Comparisons grow to meme-stock style trading

The speed and scale of silver’s rise and fall have prompted comparisons to meme-stock episodes such as GameStop in 2021, when coordinated retail trading sent prices far beyond levels justified by traditional valuation metrics.

Market strategists had warned during silver’s rapid ascent that prices were becoming detached from sustainable fundamentals, with momentum-driven buying increasingly resembling meme-style speculation.

That concern now appears validated, as crowded trades unwind in dramatic fashion. Several analysts say the episode highlights how quickly commodities can become financialized, with futures, options, and algorithmic strategies overwhelming physical market signals.

Gold also slips as risk appetite fades

Gold prices moved lower alongside silver, though declines were far more modest. Spot gold and U.S. futures both eased just over 1%, trading near $4,887 per ounce.

Unlike silver, gold has been supported by central bank purchases, geopolitical uncertainty, and expectations of eventual interest rate cuts. Still, the broader pullback in precious metals reflects a shift toward risk reduction as traders reassess crowded positions across commodity markets.

What comes next for silver

Looking ahead, analysts expect continued turbulence in silver as speculative excess is worked out of the system. While long-term demand from clean energy, electrification, and industrial applications remains strong, near-term price action is likely to be dictated by positioning, margin changes, and investor sentiment.

Many market watchers believe stability will only return once leveraged trades are fully cleared and liquidity conditions normalize. Until then, silver is expected to remain highly sensitive to technical signals and macro headlines, keeping volatility elevated for both short-term traders and long-term investors.

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