After reaching a new historic peak of over $84 per ounce, silver prices sharply declined, losing more than 5% in a short period of time. This trend was particularly noticeable during trading on Monday, when the market experienced high volatility.
This is reported by Finway
Reasons for the Decline and Influencing Factors
The sharp fluctuations in silver quotes were a result of increased speculative interest and general volatility in the financial markets. The day before, this precious metal had surpassed the psychological threshold of $80 per ounce, after which market participants began actively taking profits. Throughout the end of the year, the price of silver had been rising amid an imbalance between supply and demand, as well as due to the weakening of the US dollar. Additional instability was caused by geopolitical risks, which simultaneously affected the dynamics of other metals – gold, platinum, and palladium, which also reached record price levels.
Impact of China and Measures to Limit Volatility
A significant market push came from comments made by American entrepreneur Elon Musk regarding new export restrictions from China. China is one of the top three silver producers in the world, although its primary role is as a major consumer rather than a key exporter of the metal. The new export measures were implemented on October 30, continuing the previously adopted policy of restrictions.
“This is not good. Silver is needed in many industrial processes”
Market analysts emphasize the significant tension that has arisen: “The speculative atmosphere is very strong. There is a frenzy surrounding the limited supply, and it currently seems excessive”, they note.
To reduce risks and stabilize the situation, some trading platforms are already intervening in the course of events. CME Group Inc announced an increase in margin for silver futures contracts on the Comex exchange. The new measures will take effect on Monday and are intended to limit excessive speculative fluctuations in this market.