05.02.202615:23:37UTC+00Silver Extends Plunge

Silver experienced a significant drop of up to 16.5%, settling at approximately $73.5 per ounce, thereby ending a short-lived two-day recovery as the attempted rebound fell through and volatility surged across the precious metals market. Anticipations for buying at lower prices were quickly dashed as market turbulence intensified, with silver seeing a noteworthy underperformance amid widespread deleveraging. This decline coincided with worsening labor indicators in the US, such as the report of 108.4K job cuts in January and an increase in initial unemployment claims to 231K. These signs bolstered forecasts for potential Federal Reserve rate reductions later in the year. Despite this, the immediate reaction leaned toward risk reduction rather than defensive investments, exerting additional pressure on silver due to margin-induced selling following the sharp rally observed last week. Continued policy uncertainty compounded the situation as investors assessed the potential impact of Kevin Warsh’s nomination as Fed Chair, recognizing his advocacy for a reduced balance sheet and a more cautious easing stance. In addition, a decrease in geopolitical risks, due to the announcement of forthcoming US-Iran talks, diminished short-term demand for safe-haven assets.