On Monday, December 29, silver prices fell sharply, dragging gold and other precious metals lower, after a record rally abruptly gave way to a pullback.
By the close of daytime trading, spot silver prices were down almost 9 percent, to just above $72 per troy ounce. The move marked the largest single-day decline since the Covid pandemic and almost entirely erased the gains recorded during the low-liquidity Boxing Day session.
The sell-off spread to gold as well, with prices falling more than 4 percent to slightly above $4,300 per troy ounce, snapping a streak of successive record highs set in previous days.
According to traders, the price action reflects both profit-taking after a prolonged rally and the market’s reaction to a CME notice issued on December 26. The notice outlined higher margin requirements for a range of metals futures contracts, including silver and gold, effective after December 29. Higher margins raise the cost of holding leveraged positions, forcing market participants to reduce risk.
Rushabh Amin, a portfolio manager for multi-asset strategies at Allspring Global Investments, said the combination of higher margin requirements, thin liquidity and other factors “is working not only against silver but is also spilling over into other precious metals.”
“This is not a classic bubble peak, but rather a very harsh consolidation phase,” he added, using a market term for a sharp pullback following a speculative surge.
The sell-off followed a record rally in the metal, as investors moved aggressively into safe-haven assets to hedge against geopolitical tensions and concerns over the debasement of traditional currencies, including the US dollar. Early in Monday’s trading, spot prices briefly rose above $80 per troy ounce for the first time, up from around $50 as recently as November.
Analysts point to signs of a speculative bubble in the precious metals market, as investors pile into asset classes with constrained supply. Prices have also been supported by interest-rate cuts in the United States, which have reduced the relative appeal of dollar-denominated instruments.
Ole Hansen, head of commodity strategy at Saxo Bank, said silver’s advance had taken on a “parabolic” character, leaving the market vulnerable, even though margin requirements, while rising, remain low by historical standards.
Growing attention to the surge in silver prices was also reflected in a comment by Elon Musk: on December 26, he wrote on X that higher prices were “not good,” citing the metal’s wide industrial use.
In an analytical note dated December 29, UBS said that the rise in gold prices had been partly driven by “seasonal liquidity” and demand for real assets. The bank warned that after the strongest year since 1979, prices are trading at an “elevated premium.”