Silver prices plunged during Asian trading on Thursday, leading losses across the precious metals complex as fresh selling activity wiped out much of the metal’s recent rebound.
Spot silver fell by as much as 16.7% to $73.5565 per ounce, moving back toward levels seen during last week’s sharp decline. Silver futures for March delivery also dropped heavily, falling more than 10% to $73.383 per ounce.
The sharp decline occurred quickly during Asian market hours and coincided with a modest rise in the U.S. dollar.
“Even as prices of precious metals are now less elevated following the correction, sensitivity to the USD, yield repricing, and uncertainty around Fed policy under new leadership remains high. While positioning has likely reset to some extent, confidence may not have fully restored, pointing to a potential period of choppier, two-way trading,” Christopher Wong, FX strategist at OCBC said in a mailed comment.
Despite the sharp fall, Wong characterised the recent pullback in precious metals as “a normalisation phase rather than a trend reversal,” stressing that key demand fundamentals remain supportive. He pointed to sustained central bank demand for gold and ongoing industrial demand for silver as underlying drivers of longer-term strength.
“While higher beta and sentiment-driven flows can amplify short-term volatility, medium-term fundamentals remain supported by demand from solar PV, grid modernisation and electrification themes, which should help cushion downside once positioning and sentiment stabilise,” Wong said.
A stronger U.S. dollar has been a major factor weighing on precious metals in recent days, as the currency rebounded from nearly four-year lows. The move followed expectations that Kevin Warsh, nominated by U.S. President Donald Trump to lead the Federal Reserve, may adopt a less dovish policy stance than markets had anticipated.
This shift in expectations has continued to pressure metal prices in recent sessions.
Currency markets have remained supportive of the dollar ahead of key European central bank meetings scheduled for Thursday and the upcoming U.S. nonfarm payrolls report expected next week. The employment data, originally due on Friday, was postponed until February 11 following a partial U.S. government shutdown earlier in the week.
Leave a Reply