Silver Suffers Another Turbulent Week As Volatility Surges And Prices Struggle To Stabilise

(MENAFN- Khaleej Times) Silver extended its dramatic downturn this week, closing Friday at $77.20 per ounce - a slight rebound from the extreme lows seen in the prior sessions but still far below the record highs touched in late January.

The metal's sharp swings, driven by futures-market flows, a firmer US dollar and waning risk appetite, have intensified concern among investors who have watched silver shed more than 40 per cent from its recent peak.

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The correction comes after several days of heavy selling, including a near‐20 per cent plunge on Thursday, marking silver's second‐largest daily drop on record. Carsten Menke, Head of Next Generation Research at Julius Baer, said the renewed sell‐off has been difficult to tie to any clear news catalyst.“We struggle to single out any specific news for the renewed sell‐off,” he said, adding that the move“again underpins the dominance of flows over fundamentals in the market at the moment”.

Menke noted that margin hikes by global futures exchanges, including the CME,“cannot explain the massive moves,” stressing that the exchange acted only after prices collapsed rather than causing the sell‐off. Instead, he attributed the volatility to speculative positioning - especially in China - where retail hoarding and limited product availability contributed to outsized market moves.“Volatility is set to stay elevated at least in the short‐term,” he warned, maintaining a neutral view on silver and Julius Baer's long position in the gold‐silver ratio.

The turbulence continued as global markets reacted to a stronger US dollar and sharp declines in technology stocks. According to Scope Markets Chief Markets Analyst Joshua Mahony, silver“collapsed 17 per cent within just two hours” during Asian trading, underscoring how sentiment in China has shifted.“Notably, that decline came during the Chinese session, highlighting the loss of confidence in a region that had previously stood as the hub of physical buying,” he said. Mahony linked the latest declines to the market reaction following Kevin Warsh's nomination to lead the US Federal Reserve, saying the stronger dollar and uncertainty around interest‐rate policy have added pressure across precious metals - and even cryptocurrencies.“It appears that the haven role of precious metals has gone out the window for the time being,” he said.

From a technical perspective, the picture remains fragile. Vijay Valecha, Chief Investment Officer at Century Financial, highlighted that silver continues to trade below both the 9‐day and 21‐day simple moving averages, with momentum indicators deep in negative territory.“Silver is still trading below the 9 and 21 SMA on the daily chart and has an RSI of 28, indicating that it is in the oversold territory,” he said. On the one‐hour chart, he sees resistance at $81 (100‐SMA) and $96 (200‐SMA), while immediate support sits at $64 and then $57.

International spot data reinforces the sense of instability. Earlier in Friday's global session, silver had tumbled as low as $64.1 per ounce, down nearly 10 per cent on the day, before rebounding sharply toward $70 - a reflection of the extreme whipsaw movements now dominating the market. Analysts attribute the decline to a combination of elevated valuations, leveraged unwinding, and broader concerns around global economic sentiment. A strengthening US dollar - headed toward its strongest weekly performance since November - has further eroded investor appetite for dollar‐denominated commodities, accelerating the sell‐off.

Outlook for next week

Market watchers expect the coming week to remain volatile as traders digest the severity of recent declines. Julius Baer's Menke cautioned that“the dust of the sell‐off will need some time to settle,” adding that an immediate return to January's euphoric rally“looks increasingly unlikely” given current positioning and sentiment trends. Analysts at ABP Live echoed this view, saying that although fundamentals tied to industrial demand remain intact, the unwinding of speculative positions could continue to exert downward pressure in the near term.

Technically, Valecha's oversold readings suggest the possibility of a short‐term bounce, but only if prices reclaim resistance levels above $81. Until then, traders may continue to test support near recent lows.

Overall, silver enters next week on shaky footing - caught between long‐term structural demand and short‐term market stress, with volatility expected to remain the defining theme.

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