publication
2026-02-05 11:13
Overnight, there was a massive drop in silver futures prices. Before analysts quickly came up with some “story”, the white exchange rate managed to make up for half of the losses. However, this still meant a drop of several percent.
In the middle of the night in Europe, during the Asian trading phase, the silver rate dropped from approximately USD 87 to USD 73.38/oz in less than an hour, which translated into a depreciation of over 15%. Later, the situation began to calm down and on Thursday morning the white metal was valued at USD 78.34 per ounce. That is still over 7% below Wednesday's reference price.
This was the second crash on the silver market in a week. The previous one took place on Friday, January 30. Then the quotations of the most active series of silver futures contracts dropped by a record 28%. However, on Tuesday we witnessed a huge rebound in the precious metals markets and saw silver prices increase by up to 15%. One thing is certain: the volatility on the white metal market is legendary.
Such strong turbulence makes market analysts helpless and they try to come up with reasons behind such sudden declines. In the case of silver, there was talk of the role of Chinese speculators and the strengthening of the dollar. But all these translations do not seem very convincing.
The fact is, however, that the first downward movements in the silver market occurred when last Thursday US President Donald Trump announced that he intended to nominate Kevin Warsh for the position of chairman of the Federal Reserve. Warsh is known for his opposition to the Fed's bloated balance sheet and would see significant “quantitative tightening” of monetary policy in the United States. Therefore, the threat of a reduction in dollar liquidity could have prompted some investors to close long positions also on the silver market (or rather silver futures contracts). That would at least partially explain Friday's crash.
However, tonight it was difficult to see any significant catalyst for such a sudden drop in silver prices. Experts from Goldman Sachs only noted that so far the greatest volatility in the silver market occurred during the “European” and “American” parts of trading. This time the declines took place during the “Chinese” phase of the market.
– Market movements are likely to remain volatile until we gain greater certainty about the prospects for monetary policy – wrote analysts at Standard Chartered bank. In their opinion, this short-term volatility results in some investors leaving open positions through ETFs. But they also added that “the structural drivers of precious metals gains remain unchanged.”
– Sentiment has become soft across many asset classes. Losses spread from one market to another, creating a self-reinforcing feedback loop due to low market liquidity, said Christopher Wong, a strategist at OCBC, speaking to Reuters.
It is worth noting that strong declines were also recorded in the case of palladium (which dropped by 7.8%) and platinum (even -9%). Gold prices were more stable, falling by 3.7% at the worst, but by noon they were down only 1% at a valuation of USD 4,900/oz.
