Silver Crashes Over 15%, Wiping Out Brief Rally as Fed Uncertainty Rattles Metals
(Market Watch) -- Silver prices nosedived on Thursday, collapsing over 15% and decisively reversing a short-lived recovery attempt. The white metal's dramatic fall dragged gold lower, underscoring the extreme fragility in precious metals markets following last week's historic sell-off.
Spot silver fell as much as 15.2% during the session, after having briefly climbed back above $90 an ounce in early Asian trade. Spot gold dropped as much as 3.2% in choppy trading, reflecting broad-based pressure on haven assets.
The plunge marks a stark reversal from last month's powerful rally, which was fueled by speculative frenzy, geopolitical tensions, and debates over central bank independence. That surge came to a screeching halt late last week, with silver logging its worst single-day drop on record.
Market focus has now shifted squarely to the U.S. monetary policy outlook. President Donald Trump's nomination of Kevin Warsh for Federal Reserve chair is being closely scrutinized. In a notable comment Wednesday, Trump stated he would not have nominated Warsh had the candidate expressed a desire to raise interest rates, adding to expectations that the Fed may maintain an accommodative stance—a theoretical positive for non-yielding metals.
"Price action is likely to remain volatile until there is greater certainty on the monetary policy outlook," said Standard Chartered Plc analyst Sudakshina Unnikrishnan in a client note. The bank attributed some of the near-term swings to investor redemptions from exchange-traded products but maintained that the structural drivers for the sector "remain intact."
As of late morning in Singapore, spot gold was down 2.5% at $4,839.45 an ounce. Silver traded near $75.89, down almost 14% on the day.
Trader Reactions: From Numbness to Outrage
The volatility is drawing strong reactions from market participants:
Michael R. Chen, Portfolio Manager at Horizon Capital: "This is a classic volatility washout. The fundamental thesis for metals—negative real rates, fiscal concerns—hasn't vanished. We're using this dip to scale into select positions, but with tight risk controls."
Sarah Elwood, Independent Commodities Trader: "It's absolute carnage. The algorithms are feeding on every headline, and retail investors who bought the top are getting obliterated. The 'silver squeeze' narrative has completely unraveled. This market has no memory from one day to the next."
David Park, Chief Strategist at Steadview Economics: "The market is rightly focused on the Fed. A Warsh nomination introduces significant uncertainty. His historical views on quantitative easing differ from recent Fed policy, creating a fog that markets despise."
Lisa G. Mendoza, Precious Metals Analyst at Bullion Trust: "The physical market tells a different story than the paper price. Industrial demand and retail coin sales remain robust. This disconnect between futures and physical suggests much of this move is speculative positioning being unwound at speed."