Silver Plunges as Two-Day Recovery Unravels
Silver futures crashed nearly 15% on Thursday, reversing a brief two-day recovery and plunging to approximately $76 per ounce. The white metal has now lost roughly 45% of its value from its late-January record high above $120, marking one of the most violent corrections in modern commodities history.
Gold also fell on Thursday, slipping about 2% after trading near $4,970 earlier in the week. The yellow metal remains roughly 10% below its all-time high above $5,500 reached on January 29.
Easing Geopolitical Tensions Remove Safe-Haven Premium
Thursday's selloff was triggered by a convergence of factors that stripped the geopolitical risk premium from commodity markets. A telephone call between the leaders of China and the United States, combined with confirmation that the U.S. and Iran will hold talks in Oman on Friday, eased fears of broader military conflict in the Middle East.
"Talks between Iran and the United States appear to be back on track, which has removed some of the geopolitical premium from commodity markets, particularly oil," said analyst Tony Sycamore at IG.
The diplomatic progress comes after U.S. forces downed an Iranian drone near an aircraft carrier in the Arabian Sea in recent weeks, an incident that had bolstered safe-haven demand for precious metals.
Dollar Strength and Warsh Nomination Continue to Weigh
The U.S. dollar has strengthened since President Trump nominated former Federal Reserve Governor Kevin Warsh to succeed Chair Jerome Powell when his term expires in May. Warsh, who served on the Fed Board of Governors from 2006 to 2011, is widely viewed as a monetary policy hawk.
"Based on his past statements and actions in his previous stint as a Fed Governor, Warsh was by far the most hawkish of the four final candidates for Fed Chair," said Brett House, an economics professor at Columbia Business School.
A stronger dollar makes gold and silver more expensive for foreign buyers, while the expectation of tighter monetary policy raises the opportunity cost of holding non-yielding assets like precious metals.
However, Trump himself pushed back on the hawkish narrative, stating he would have passed on Warsh if the nominee had expressed a desire to raise interest rates.
CME Margin Hikes Amplify Selling Pressure
The CME Group's decision to raise margin requirements on precious metals futures has added fuel to the selling. Margins on COMEX gold futures were increased to 8% from 6%, while those on silver futures were lifted to 15% from 11%. The higher capital requirements have forced leveraged traders to liquidate positions, compounding the downward pressure.
"What failed was the assumption that assets widely seen as defensive would remain liquid under stress," explained Naeem Aslam of Zaye Capital Markets, noting that the selloff was driven more by positioning and leverage than by a change in fundamentals.
Analysts See Correction, Not Reversal
Despite the carnage, many Wall Street strategists argue the structural bull case for precious metals remains intact. JP Morgan has raised its year-end 2026 gold price forecast to $6,300 per ounce, citing sustained demand from central banks and investors.
"Gold's thematic drivers remain positive and we believe investors' rationale for gold allocations will not have changed. The conditions do not appear primed for a sustained reversal in gold prices," said Deutsche Bank's Michael Hsueh.
For context, even after the brutal correction, gold at roughly $4,900 per ounce remains more than $2,000 higher than where it traded a year ago. Silver at $76, while down sharply from its peak, is still more than double its price from February 2025, when it traded below $35.
Investors will be closely watching Friday's U.S.-Iran talks in Oman and upcoming Federal Reserve commentary for signals on whether this correction has further to run or whether the dip-buying opportunity that fueled earlier this week's recovery will re-emerge.
Sources: CNBC, Trading Economics, Fortune, CBS News, Bloomberg, Deutsche Bank, JP Morgan, IG Markets, Zaye Capital Markets, Columbia Business School