Why Silver’s 30% crash is shaking global markets

Silver’s 30% crash is shaking global markets because it exposed how fragile the recent precious metals rally had become. Experts noted that what appeared to be a structurally driven surge was, in reality, heavily propped up by speculative positioning, leverage, and thin liquidity. When prices turned, forced selling rippled through metals, currencies, and risk assets, triggering a broader reassessment of market stability.

The scale of the move was striking. Spot silver plunged as much as 17% in a single session after briefly trading above $90 an ounce, before collapsing to around $77. 

Gold followed, dropping more than 3.5%, its sharpest fall since 2013. The episode has become a warning shot for investors navigating momentum-driven markets in an uncertain policy environment.

What’s driving Silver’s crash?

At the heart of silver’s collapse lies an aggressive build-up - and rapid unwinding - of speculative positions. In the weeks leading up to the peak, investors flooded into leveraged exchange-traded products and call options, pushing prices far beyond levels justified by physical demand. When the rally stalled late last week, those positions turned from tailwinds into liabilities, triggering margin calls and stop-losses in quick succession.

Liquidity conditions made matters worse. Silver trades in a much smaller and less liquid market than gold, particularly in the London over-the-counter market. Goldman Sachs said dealer hedging flipped abruptly from buying into rising prices to selling into falling ones, allowing losses to cascade through the system. The fact that some of the most violent moves occurred while Chinese futures markets were closed suggests Western flows drove both the surge and the unwind.

Why it matters

Silver’s crash mattered because it did not stay contained. According to reports, the sudden reversal weighed on sentiment across metals markets, with copper slipping below $13,000 a tonne and broader commodity prices coming under pressure. When a metal that straddles both safe-haven and industrial roles breaks down so violently, it often signals deeper discomfort with risk.

Analysts also warn that positioning risks have not fully cleared. Sunil Garg, managing director at Lighthouse Canton, said speculative excess “hasn’t been fully flushed out,” despite the sharp correction. While long-term industrial demand for silver remains strong, near-term price action is still being dictated by financial flows rather than end-use consumption.

Impact on markets and investors

For traders, the fallout has been immediate and costly. Metals exchanges, including CME Group, raised margin requirements following the sell-off, increasing the cost of holding leveraged positions and forcing further deleveraging. That dynamic tends to suppress quick rebounds and prolong volatility, particularly in assets that recently attracted momentum traders.

The episode has also drawn uncomfortable comparisons with meme-stock behaviour. Market participants increasingly describe silver’s recent rally as detached from sustainable valuation, driven more by momentum than fundamentals. Steve Sosnick of Interactive Brokers said the metal experienced “momentum trading that exceeded even the outsized moves seen across other speculative assets,” leaving prices vulnerable once sentiment turned.

Expert outlook

Looking ahead, volatility is likely to persist. Standard Chartered analysts said precious metals will remain unstable until there is greater clarity on the US monetary policy outlook, particularly the pace of interest rate cuts. Hawkish comments from Federal Reserve officials have strengthened the US dollar, adding pressure to dollar-denominated metals such as silver.

Political uncertainty has further complicated the picture. Markets are weighing the implications of Kevin Warsh’s nomination as Federal Reserve chair, even as President Donald Trump insists rate cuts remain likely. For silver, traders are watching the $70 level closely. A sustained move below it could deepen risk aversion across asset classes, while holding above it may allow speculative excess to unwind more gradually.

Key takeaway

Silver’s 30% crash shook global markets because it revealed how quickly momentum-driven rallies can unravel under pressure. The sell-off exposed liquidity gaps, excessive leverage, and fragile sentiment across metals markets. While structural demand remains supportive, silver’s path forward depends on whether speculative excess can fully unwind. Traders will be watching the $70 level and US policy signals closely in the days ahead.

Silver technical outlook

Silver has retraced sharply from recent highs following an extended upside move, with the price moving back inside the Bollinger Bands after briefly trading beyond the upper band. Despite the pullback, the bands remain widely expanded, indicating that volatility is still elevated relative to earlier phases. 

Momentum indicators show a clear shift from extreme conditions: the RSI has fallen from overbought levels and is now positioned below the midline, reflecting a significant cooling in momentum. 

Trend strength remains elevated, as evidenced by high ADX readings, indicating that the broader trend environment remains strong even as short-term momentum has weakened. Structurally, price continues to trade well above earlier consolidation areas around $72, $57, and $46.93, underscoring the scale of the prior advance.