Silver plunges from a high platform, with spot silver dropping over 6% at one point; profit-taking, a strong dollar, and Indian tariff shocks resonate.

As of this Monday, after five consecutive days of gains, the silver market began to fluctuate at high levels, experiencing a major sell-off on Thursday.

On Thursday, the 14th, Eastern Time, the New York COMEX July silver futures maintained a downward trend throughout the day. After the US stock market closed, prices fell below $83.80, hitting a daily low and expanding the intraday decline to 6.3%. This Monday, silver futures just recorded the longest winning streak since February 25, closing near $86 per ounce and reaching a high not seen since March 10.

Compared to gold, silver has shown significantly more volatility recently. Previously driven by Middle East tensions, rising inflation expectations, and optimistic industrial demand, silver prices surged by over 15% over several days, but market sentiment sharply reversed on Thursday.

Profit-taking at high levels: Silver’s previous rapid rise

Analysts generally believe that the recent sharp decline was primarily a technical correction following an overly rapid rally.

This Monday, New York silver futures closed up more than 6%, marking the largest daily gain since February 27, with a cumulative increase of nearly 17% over the past five trading days. Media reports pointed out that investors previously heavily bet on silver, which has both “hedging and industrial metal” attributes, making its performance notably stronger than gold.

However, after the rapid ascent, long positions have become noticeably crowded.

Kitco previously cited market opinions that, after silver broke through $80, a large influx of trend-following funds, CTAs, and short-term leveraged capital entered the market quickly, making it highly vulnerable. Once upward momentum weakens, it can easily trigger programmed profit-taking and liquidations.

Thursday’s plunge was seen by many traders as a typical “stampede-style pullback after overheating.”

Dollar and US Treasury yields rebound, suppressing precious metals

Macroeconomic pressures are also unavoidable.

On Thursday, the dollar index rebounded sharply, and US Treasury yields remained high, reducing the appeal of non-yielding assets like silver and gold. Similar situations occurred in March, when silver prices once plummeted by 15% in a single day. Investing.com cited analysis indicating that a strengthening dollar and rising US Treasury yields significantly increase the opportunity cost of holding precious metals.

Meanwhile, market expectations for the Federal Reserve to cut interest rates in the short term have also cooled.

Although some institutions believe that the Fed being stuck in a “policy deadlock” benefits silver’s long-term performance, in the short term, as long as US economic and inflation data remain resilient, high real interest rates will continue to suppress precious metal valuations.

India suddenly raises import tariffs, demand concerns intensify

Uncertainty on the demand side also became a key trigger for Thursday’s market sell-off.

This week, the Indian government suddenly increased import tariffs on gold and silver from 6% to 15%, aiming to curb precious metal imports and ease foreign exchange reserves pressure. Reports indicated that after the tariff hike was announced, domestic gold and silver futures in India surged temporarily, but market concerns quickly arose: high tariffs could suppress demand in one of the world’s largest physical precious metal markets.

Kitco analysis suggests that India’s policy change will directly impact physical silver demand, especially in jewelry and silver bar investment markets. For silver that has already surged significantly, any signs of demand slowdown could amplify market volatility.

Looking ahead: Long-term fundamentals remain, but volatility may become the norm

Despite Thursday’s sharp decline, many institutions remain cautiously optimistic about silver prices in the medium to long term.

HSBC recently raised its silver price targets for 2026 and 2027, believing that energy transition, photovoltaic demand, and ongoing global supply shortages will continue to support silver’s long-term price center. However, the bank also warned that after a rapid short-term rally, “further upside may be limited,” and there is a clear risk of short-term correction.

Kitco recently pointed out that the global silver market has been in a supply deficit for many years, with ETF inflows and industrial demand growth still supporting silver prices.

Some analysts even believe that silver is undergoing a “structural revaluation.”

On one hand, silver combines the properties of precious and industrial metals; on the other hand, rapid expansion in AI data centers, electric vehicles, and solar industries continues to boost industrial silver demand. Kitco states that breaking through $80 reflects, to some extent, changes in the global economic structure.

However, many traders also warn that compared to gold, the silver market has weaker liquidity and a higher proportion of leveraged funds, which often amplifies its volatility.

In other words, silver may continue to experience a “long-term bullish outlook with short-term turbulence.”

Risk warning and disclaimer

Market risks are inherent; investments should be cautious. This article does not constitute personal investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Invest accordingly at your own risk.