Silver prices plunged nearly 6% on Tuesday, with COMEX silver futures (SI1!) falling to $73.30 per ounce, down $4.665 or 5.98% as of 11:00 GMT+5:30. The sharp decline extends a three-week losing streak amid thin liquidity conditions due to market holidays in China, Hong Kong and other parts of Asia.
The latest fall follows a dramatic reversal in precious metals after a speculative rally earlier this year. Chinese traders had driven silver to a record high above $120 per ounce in late January. However, prices later tumbled to around $64 earlier this month as leveraged positions were unwound and investors liquidated holdings to cover losses in other asset classes. Authorities in China also moved to curb market risks, adding to volatility.
Although silver rebounded nearly 3% on Friday after softer-than-expected US inflation data boosted expectations of Federal Reserve rate cuts, the momentum failed to sustain. With US markets back open, investors are now focused on the upcoming Fed minutes and the core PCE price index for clearer direction on monetary policy.
Markets are currently pricing in a rate cut in July, with a strong probability of an earlier move in June, keeping volatility elevated in precious metals.