Silver has rebounded above $110, recovering from its sharpest intraday reversal since the 2008 financial crisis, falling more than 7% from Monday’s all-time high above $117.
The extreme volatility in precious metals reflects a broader crisis of confidence in fiat currencies and government debt. With gold prices topping $5,000 and silver prices registering their biggest price movements in 17 years, markets are showing serious concerns about the fiscal sustainability of major economies, a sentiment that could spill over across risk assets, including cryptocurrencies.
Record surge and sharp reversal
The white metal posted its biggest intraday gain since the global financial crisis, soaring 14% before losing most of its gains in late U.S. trading. Silver found support near $103 before rallying above $110, with losses narrowed to less than 5% as Asian session buying intervened.
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Gold also declined after touching $5,111.07, settling around $5,100.
Downgrade trade fuels rally
The rally in precious metals reflects a growing exodus of investors from currencies and government bonds amid mounting fiscal concerns. Last week’s massive decline in Japan’s government bond market highlighted growing skepticism about massive government spending across the developed world.
Gold has historically served as a barometer of market instability, offering protection against unexpected inflation, unexpected market downturns and geopolitical escalation, said Max Belmont of First Eagle Investment Management.
The dollar index fell nearly 2% in six sessions amid speculation that the U.S. might support Japan’s strong yen, further raising concerns about the Federal Reserve’s independence and the unpredictability of the Trump administration’s policies.
I get a technical warning
Despite the historic rally, major refiner Heraeus Precious Metals warned that the bull market could extend too much, citing overbought technical indicators and the current gold-silver ratio of 50, down from 100 a year ago.
J. Safra Sarasin’s Claudio Wewel warned that silver’s volatility means it typically suffers bigger drawdowns than gold after extended rallies, and that the risk-reward balance could deteriorate if momentum weakens.
Key levels to focus on
Silver’s ability to regain $110 will be critical to its near-term direction. A rally towards Monday’s close of $115.50 could establish a V-shaped recovery narrative, but a break below $105 would signal further correction ahead.
Markets are currently awaiting President Trump’s nomination to chair the Federal Reserve and this week’s FOMC decision, with the central bank widely expected to pause its rate-cutting cycle.
