Spot silver prices plunged nearly 6% on Tuesday, slipping to around $73.30 per ounce as selling pressure intensified across precious metals. The sharp decline extends a three-week losing streak, with thin liquidity conditions during market holidays in China, Hong Kong and other parts of Asia amplifying volatility.
Speculative rally unwinds
The latest fall comes after a dramatic reversal in silver’s recent rally. Earlier this year, Chinese traders had driven silver prices to a record high above $120 per ounce in late January amid heavy speculative buying. However, the momentum proved unsustainable.
Prices later corrected sharply, falling to nearly $64 earlier this month as leveraged positions were unwound. Investors also liquidated holdings to cover losses in other asset classes, accelerating the decline. In addition, regulatory steps by Chinese authorities to curb excessive speculation added further pressure to the metal.
Liquidity concerns add to volatility
With several Asian markets shut due to holidays, trading volumes remained relatively subdued. Thin liquidity often exaggerates price swings, and the absence of strong buying support contributed to Tuesday’s sharp drop.
Focus shifts to US data and Fed signals
Although silver had rebounded nearly 3% on Friday following softer-than-expected US inflation data, the recovery failed to hold. Market participants are now closely watching the upcoming Federal Reserve minutes and the core PCE price index for clearer guidance on the interest rate outlook.
Markets are currently pricing in a potential rate cut in July, with growing expectations of a possible move as early as June. However, uncertainty around the timing of policy easing continues to keep precious metals volatile.