Silver Plunges, Erasing Gains as Market Rotation Hits Precious Metals and Tech
Silver led a sharp decline across precious metals on Thursday, surrendering its recent rally as a broader market rotation sent investors fleeing from risk assets.
The spot price for silver fell 9.2% to approximately $80.05 per troy ounce in early trading, after plummeting as much as 17% during the session. This steep drop effectively erased the gains accumulated over the preceding two days, marking a dramatic reversal for the metal which had soared to a record high above $121 per ounce just last week before Friday's 36% plunge.
Gold also retreated, slipping below the psychologically significant $5,000 level to trade near $4,934 per ounce. The pressure on dollar-denominated commodities coincided with the U.S. Dollar Index climbing to a two-week high, reinforcing the traditional inverse relationship.
"The market is witnessing a classic flight from recent winners," said Ewa Manthey, ING's commodities strategist. "The dollar's strength is reasserting its dominance, making metals more expensive for holders of other currencies and dictating short-term price action. Silver's notoriously thinner liquidity compared to gold only exacerbates these swings."
Analysts note the volatility was foreshadowed by hedge funds and managed money gradually reducing their long positions in silver and other metals in recent weeks, shifting capital into energy and other sectors.
The risk-off sentiment extended far beyond the metals market. Technology stocks and cryptocurrencies sold off in choppy trading. The software sector faced particular pressure after Anthropic unveiled a new AI tool capable of handling legal clerical work, sparking fears of widespread disruption.
"This isn't just a correction; it's a fundamental reassessment," commented Louis Navellier of Navellier & Associates. "AI advancement is no longer a distant threat—it's an immediate pressure on business models, accelerating job displacement and punishing any software firm without an unassailable client moat."
The tech selloff rippled into Asian markets on Thursday, with giants like Samsung Electronics and SoftBank Group falling 6% and 7%, respectively. Bitcoin traded around $71,200, down roughly 7% on the day and 19% over the past week.
Some strategists, however, view the shift as a healthy market normalization. "We're seeing a rotation out of crowded tech trades," Stephen Parker, co-head of global investment strategy at JPMorgan Private Bank, told CNBC. "Investors are searching for value and opportunity beyond the AI-driven narrative that has dominated the year."
Market Voices: A Split Reaction
David Chen, Portfolio Manager at Horizon Capital: "This is a necessary breather. Silver had become parabolic, and tech was overextended. The rotation into other assets indicates a healthier, more balanced market foundation."
Maya Rodriguez, Independent Commodities Trader: "The volatility in silver is terrifying but predictable. The retail crowd that chased the record high is getting wiped out. It's a reminder that these markets aren't for the faint of heart."
Professor Arjun Mehta, Economics, Stanford University: "The simultaneous drop in metals and tech, both considered different types of 'hedges,' is intriguing. It suggests the driving force is a broad recalibration of global liquidity and risk premia, not a sector-specific story."
Rebecca Frost, Founder of 'TechTruth' Blog: "This is the beginning of the AI bubble burst. The hype has met reality—these tools actually replace costly human labor, and the market is finally pricing in the devastating impact on software company revenues and the broader job market. The sell-off is warranted and long overdue."