FX.co ★ Silver Extends Historic Drop

On Friday, the price of silver plummeted over 8%, dropping below $65 per ounce—a low not seen in seven weeks—due to widespread deleveraging and a growing selloff within financial markets. This decline represents a roughly 45% fall from silver’s peak on January 29, effectively erasing all gains achieved this year and marking its steepest fall since 1980. Earlier, in January, silver, along with other precious metals, had soared to record highs. This surge was prompted by heightened geopolitical risks, economic uncertainties, and apprehensions concerning the US Federal Reserve's independence, which collectively boosted the demand for safe-haven assets. Speculative purchasing, particularly by Chinese traders, further inflated the rally, leaving the markets exposed to a swift reversal as market sentiment shifted. Additional pressure on precious metals arose following a sharp recovery in the dollar, which coincided with the nomination of Kevin Warsh as the anticipated next chair of the Federal Reserve, a nominee perceived as having a more hawkish stance. Silver's volatility surpassed that of other metals, as substantial speculative activity overshadowed its fundamental supply-demand dynamics.