Silver plunges as forced liquidation and USD rebound weigh on prices

LONDON (January 30) Silver (XAG/USD) comes under intense selling pressure on Friday, posting a sharp correction after reaching a record high the previous day. The white metal gives back a large portion of its recent gains as extreme volatility across precious metals markets triggers widespread liquidation of leveraged positions, while investors lock in profits at elevated price levels. At the time of writing, Silver trades around $102.20, down 12.30% on the day, after hitting an all-time high at $121.66 on Thursday.

The sell-off accelerated during the European session, with prices briefly plunging to an intraday low of $95.08 before attempting to stabilize above the psychological $100 level. This violent move reflects a broad-based pullback from the most speculative safe-haven assets, as markets rapidly reassess the outlook for US monetary policy.

Silver is also pressured by the strengthening of the US Dollar (USD) and rising US Treasury yields following the announcement that US President Donald Trump has nominated Kevin Warsh to lead the Federal Reserve (Fed). Investors view Kevin Warsh as more hawkish on inflation and supportive of balance sheet reduction, reinforcing expectations of a less accommodative Fed than previously anticipated. This shift increases the opportunity cost of holding non-yielding assets such as Silver, weighing further on prices.

Against this backdrop, the spectacular rally seen in recent weeks gives way to a brutal consolidation phase. Even so, despite the sharp pullback, Silver remains on track to post one of its strongest monthly performances on record, underpinned by underlying safe-haven demand driven by geopolitical tensions, particularly in the Middle East, and persistent uncertainty surrounding global growth and the trajectory of US monetary policy.

FXStreet