Silver prices plunge after hitting records as investors capitalize on gains

ISTANBUL

Silver, after hitting an all-time high of $84 per ounce on Monday, saw its fastest daily decline since February 2021, falling 7.18% on Tuesday as major exchanges raised margin requirements and investors moved to realize profits.

Silver had been setting consecutive records last week, but relatively eased geopolitical risks and the London Metal Exchange changing its margin requirements triggered a massive decline.

Silver started the year at $28.9 per ounce and was on an upward trend primarily due to US President Donald Trump’s tariff policies, uncertainty over central banks’ easing cycles, and geopolitical developments.

Silver gained around 25% in the first half of the year, reaching over $50 per ounce for the first time on Oct. 9. Strong central bank demand for precious metals, inflows into exchange-traded funds (ETFs), and rising estimates of monetary easing by the Fed pushed prices higher.

Silver reached $79.3 per ounce on Dec. 26 and $84 per ounce on Monday — meaning the precious metal’s value had surged more than 150% since the beginning of the year. Physical silver prices in China reportedly reached $90 per ounce.

Silver declined 7.18% and closed Monday at $72.8 per ounce. The steepest single-day drop in silver prices was 8.21% on Feb. 2, 2021.

Reports that the Chicago Mercantile Exchange increased margin rates for silver futures also influenced the decline.

After Monday’s sharp drop, silver recovered some of its losses on Tuesday, rising 2.4% and trading 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 said silver’s rapid rise made a technical correction inevitable.

“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 added that silver prices differed between US and Chinese exchanges, as China recently introduced a number of silver export regulations.

“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.