By Antonio Di Giacomo, Senior Market Analyst at XS.com
Silver experienced a sharp correction this week after posting extreme moves during sessions marked by elevated volatility. The metal fell aggressively to the $65 area, leading losses within the precious metals market, before staging a technical rebound that allowed it to recover ground and move back above $75. This behaviour reflects a market dominated by rapid position adjustments and abrupt shifts in risk appetite.
On a weekly basis, spot silver prices declined by more than 10%, while futures contracts also posted double-digit losses. Despite the recent rebound, prices remain relatively close to the lows reached during the sharp correction, indicating that the stabilization process is not yet complete and that uncertainty remains elevated.
Downside pressures intensified amid modest U.S. dollar strength, a factor that has historically weighed on precious metals. The greenback’s appreciation, combined with rising bond yields, reduced the relative appeal of non-yielding assets such as silver, triggering additional selling in an already sensitive market.
Analysts note that, despite the recent correction, silver remains highly sensitive to expectations of monetary policy. Uncertainty surrounding the Federal Reserve, particularly under new leadership, has increased volatility across financial markets.
This environment favors wide moves in both directions, with swift reactions to any changes in monetary rhetoric or macroeconomic data. The dollar’s strength during the week was driven by expectations of a less dovish stance from the Federal Reserve following the nomination of Kevin Warsh as the next chair of the central bank. This shift in market perceptions has prompted a reassessment of interest rate projections, temporarily pressuring precious metals and reinforcing investor caution.
Nevertheless, a significant portion of the market views the decline as a phase of normalization rather than a structural trend reversal. After the strong prior rally, the correction has helped purge speculative excesses and reduce leveraged positions, laying the groundwork for a potentially more balanced price dynamic in the short- to medium-term.
Silver’s fundamentals remain solid, particularly from an industrial demand perspective. The metal plays a key role in strategic sectors such as solar energy, power grid modernization, and electrification processes, factors that continue to support physical consumption and limit the risk of prolonged declines once market sentiment stabilizes.
Moreover, the energy transition and investments in technological infrastructure provide structural support for silver, partially differentiating it from other precious metals that are more dependent on financial flows. This industrial component adds resilience to prices and reinforces the metal’s appeal over longer investment horizons, despite short-term volatility.
In conclusion, the recent correction in silver reflects a technical adjustment in an environment of dollar strength and monetary uncertainty, rather than a deterioration in fundamentals. While volatility may persist in the near term, the combination of solid industrial demand and the normalization of positioning suggests that the metal maintains a constructive medium-term bias, subject to the evolution of the dollar and
Federal Reserve policy.