Soared on China-Driven Supply Concerns,
But Quickly Reversed Amid Overheating Fears
Broad Correction Across Precious Metals...
Prolonged Volatility Likely
The international price of silver plummeted just one day after surpassing an all-time high of $80 per ounce. Gold also experienced a sharp decline-its largest in two months-as clear overbought signals emerged, with the overall precious metals market showing widespread weakness.
As of 10:17 a.m. on the 29th (local time) at the New York Commodity Exchange (COMEX), the spot price of silver was down 9.2% from the previous day, trading at $71.96 per ounce. Previously, the price of silver had soared past $84 per ounce the night before, reaching a record high, but concerns over overheated investment due to the rapid surge led to a sharp correction.
Technical indicators also pointed to overheating. The 14-day Relative Strength Index (RSI) for silver had remained above 70-an overbought territory-for the past three weeks, before dropping to around 67 on this day. The RSI measures the speed of price movements over a set period, and a reading above 70 is generally interpreted as an overbought condition.
Gold prices also weakened. Gold fell 4.4% to $4,334.14 per ounce, retreating from the all-time high recorded last week. Based on February futures, gold had surpassed $4,550 per ounce this month, marking a record high, and has risen about 70% since the beginning of the year. Over the same period, silver prices surged 155%, showing the steepest climb among precious metals. Market analysts note that such rapid short-term increases have heightened pressure for a correction.
Amid the overall weakness in precious metals, platinum plunged 13% on the day, while palladium dropped more than 15%, marking the largest declines since 2022.
Previously, silver prices had soared due to concerns over supply instability stemming from China. Reports that China is set to impose export controls on silver starting in January next year triggered a rush of investment demand in anticipation. The Chinese Ministry of Commerce decided to include silver as a controlled item for national trade management, meaning that future silver exports will require government approval, unlike before.
Industrial demand is also cited as a factor increasing volatility in the silver market. Unlike gold, silver is an essential raw material in various manufacturing processes, including solar panel production. With global silver inventories nearing historic lows, concerns that supply disruptions could impact multiple industries have been reflected in prices.
However, this surge was short-lived, reversing in less than a day after reaching an all-time high amid debates over short-term overheating. Market observers note that, given the sharp price rise in a low-liquidity environment, a correction was inevitable.
Adam Lynton, a macroeconomic strategist at Bloomberg, said, "There is no clear cause for the drop in silver prices, but the combination of low liquidity and the recent steep climb created an environment ripe for a sharp correction." He added, "As long as macroeconomic factors and limited liquidity persist, irregular price swings in the metals market may continue throughout the remainder of 2025."
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