After Soaring To Record Highs, Silver Plunges 6% — What Triggered The Sell-Off?

Silver prices slid more than 6% on Friday, marking their steepest single-day decline in half a year, as the broader precious metals complex saw a sharp pullback after an aggressive rally earlier this week.

The selloff followed a historic surge that had propelled silver to record highs near $54.50 an ounce, driven by tightness in London’s physical market and strong investor demand. By 2:38 p.m. in New York, spot silver had dropped 4.4% to $51.88 an ounce, while spot gold fell 1.9%. Platinum and palladium also slumped.

Silver Prices Today
The London silver market, which had been under severe pressure from supply shortages, is showing signs of stabilization. The easing of tightness has led to profit-taking by investors who had bet heavily on the rally.

“The London shortage is alleviating somewhat from extreme levels and the more regional dislocations smooth out, there could be pressure and profit-taking,” said Nicky Shiels, Head of Metals Strategy at MKS Pamp SA.

In recent weeks, London’s squeeze had forced traders to ship metal across the Atlantic to meet demand, with borrowing costs soaring to nearly 20% annualized. However, an influx of supply, including over 15 million ounces withdrawn from Comex warehouses in New York and a 10-million-ounce outflow from silver-backed ETFs, is now easing the strain.

The price gap between London and New York markets has narrowed to around $1.10 an ounce, from as wide as $3 last week, signaling that the panic phase of the rally is cooling.

Macro Factors Weigh on Precious Metals
Silver’s steep correction also reflects a shift in investor sentiment as broader risk appetite improves. US President Donald Trump’s remarks on Friday helped calm trade tensions with China, while strong earnings from regional banks stabilized equity markets and lifted bond yields.

Higher yields typically weaken the appeal of non-interest-bearing assets such as gold and silver. Additionally, concerns over US credit quality have eased, further reducing the demand for traditional safe havens.

Gold Still Up 60% This Year
Despite the pullback, gold remains one of 2025’s top-performing assets, up more than 60% year-to-date, supported by heavy central-bank buying and sustained inflows into bullion-backed exchange-traded funds.

Traders continue to bet on at least one major US rate cut by year-end, a move that could again favor non-yielding precious metals. However, analysts warn that both gold and silver show signs of overheating, with technical indicators like the Relative Strength Index (RSI) suggesting an overbought market ripe for a correction.

Cooling but Still Strong
Analysts say silver’s rapid ascent may have outpaced fundamentals, with the latest correction bringing some balance back to the market. While easing supply constraints and stronger risk sentiment could keep prices under pressure in the short term, long-term demand for silver, especially from industrial and green energy sectors, remains robust.

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(With Inputs From Bloomberg)