Silver prices dropped sharply during Asian trading on Thursday, leading declines across the precious metals sector as renewed selling pressure wiped out most of the metal’s recent recovery.
Spot silver fell by as much as 16.7% to $73.5565 per ounce, bringing prices close to the lows recorded during last week’s sell-off. Meanwhile, silver futures for March delivery dropped more than 10% to $73.383 per ounce.
The sudden downturn unfolded during Asian market hours and coincided with a modest strengthening of the U.S. dollar.
“Even as prices of precious metals are now less elevated following the correction, sensitivity to the USD, yield repricing, and uncertainty around Fed policy under new leadership remains high. While positioning has likely reset to some extent, confidence may not have fully restored, pointing to a potential period of choppier, two-way trading,” Christopher Wong, FX strategist at OCBC said in a mailed comment.
Despite the steep pullback, Wong described the recent weakness in precious metals as “a normalisation phase rather than a trend reversal,” noting that underlying demand drivers remain intact. He highlighted continued central bank demand for gold and industrial demand for silver as key supportive factors.
“While higher beta and sentiment-driven flows can amplify short-term volatility, medium-term fundamentals remain supported by demand from solar PV, grid modernisation and electrification themes, which should help cushion downside once positioning and sentiment stabilise,” Wong said.
The stronger U.S. dollar has been a major headwind for precious metals over the past week, as the currency rebounded from near four-year lows. The move followed expectations that Kevin Warsh, nominated by U.S. President Donald Trump as the next Federal Reserve Chair, may adopt a less dovish stance than investors had anticipated.
This shift in outlook has continued to weigh on metal prices in recent sessions.
Currency markets have also remained tilted toward the dollar ahead of key central bank decisions in Europe on Thursday and the upcoming U.S. nonfarm payrolls report scheduled for next week. The payroll data, originally set for release on Friday, was postponed until February 11 following a partial U.S. government shutdown earlier in the week.