FX168 Financial News Agency (North America) reported that silver continued its extreme volatility on Friday (February 6): Amid thin liquidity and concentrated selling pressure, silver prices plummeted nearly 10% to approach $64 per ounce before quickly rebounding to positive territory. Meanwhile, the CME Group again raised margin requirements, further squeezing the operational space for leveraged traders, leaving the market still exposed to the risk of a second round of forced deleveraging during the rebound.
Earlier in the day, spot silver briefly fell to a low of $64.022 per ounce before rapidly recovering to trade back in the $74–$76 range. By the New York morning session, silver had surged over 8% to reach a high of $77.024 per ounce. Gold also reversed early losses to turn positive.
One backdrop to the market volatility is the CME Group’s latest increase in margin requirements. Margin refers to the funds futures traders deposit with exchanges or clearinghouses to mitigate default risks. When margin requirements rise, some traders tend to reduce their positions rather than add more capital, and this passive deleveraging can amplify rapid sell-offs into even sharper declines.
Silver, due to its smaller market size and lower liquidity, has always been more prone to sharp price swings compared to gold. However, the intensity of recent movements has been particularly pronounced, marking one of the most volatile periods since 1980. Speculative momentum and thinner over-the-counter (OTC) trading have further amplified both the magnitude and speed of fluctuations. Since hitting a record high on January 29, silver has fallen by over a third; the previous trading session saw a 20% plunge, erasing all gains from last month’s strong rally.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, noted that when volatility rises, market makers often widen bid-ask spreads and reduce balance sheet usage, “making liquidity most fragile at the time it is needed most.” He emphasized that before market order is restored, “volatility risks may self-reinforce.”
On a shorter timeframe, silver continues to face weekly-level pressures: Despite a significant rebound on Friday, silver still ended the week down over 12%; last week, its weekly decline reached approximately 18%, marking the worst single-week drop since 2011. OANDA analyst Kelvin Wong stated that there was “some inflow of safe-haven funds,” but caution remained dominant amid lingering fears from the prior crash.
The abrupt shift in sentiment was also influenced by macroeconomic news. On Thursday, the market demonstrated how quickly risk appetite could change—after news broke of upcoming talks between the U.S. and Iran and a relatively positive signal emerged from a call between Chinese and U.S. leaders, investors rapidly exited “hard assets” including precious metals, causing silver to plummet about 15% intraday. OCBC Bank’s view suggests that in an environment of thin liquidity, markets are prone to forming “self-reinforcing feedback loops”; IG Markets analyst Tony Sycamore described the recent moves as “aftershocks” following the intense volatility in precious metals.
A cooling of Chinese buying has also been a key factor preventing silver from stabilizing. Over the past week, Chinese demand weakened significantly, with domestic prices turning to a discount against international benchmarks, while extreme volatility dampened buyer interest. Open interest on the Shanghai Futures Exchange fell to its lowest level in over four years, indicating funds were withdrawing and positions being unwound. Jinrui Futures analyst Wu Zijie stated, “Longs are exiting via stop-losses, while shorts are taking profits”; additionally, investors also tended to reduce holdings ahead of the Lunar New Year holiday, which begins on February 16.
On the institutional outlook front, silver’s 2026 forecast is undergoing “real-time adjustments.” A survey of 30 analysts and traders showed the median forecast for silver prices in 2026 was revised upward to $79.50 per ounce, a notable increase from previous projections. However, the market also cautioned that factors driving silver’s surge could reverse just as quickly. David Russell, CEO of GoldCore, remarked that institutions are “facing generational tests”; Carsten Menke, an analyst at Julius Baer Group, warned that industrial and jewelry demand is weakening, and under cost pressures, solar panel manufacturers may seek to “reduce reliance on silver.”
Market turbulence has also spilled over into retail investment products. China’s SDIC RuYin Silver Futures Fund hit the daily 10% downside limit for multiple consecutive days, with cumulative losses exceeding 40% since its January 26 peak. The fund manager warned that if investors buy shares at significantly higher premiums above net asset value, they could face “severe losses.” Industry insiders attributed this to a “perfect storm” formed by product design, investor behavior, and trading mechanisms working together.
Notably, the pricing of longer-dated contracts remains relatively calm: COMEX silver futures for December 2026 hovered near $77 on Friday, slightly above spot prices and broadly in line with the aforementioned survey average, but still significantly below January's highs this year. Market participants believe that the key variable for silver's medium-term outlook is demand – should manufacturing continue to reduce silver usage per unit or if the U.S. dollar maintains its strength alongside prolonged elevated real interest rates, silver may struggle to sustain a rebound after the forced liquidation wave subsides.
In the coming days, critical data and events will be released in quick succession. The previously postponed U.S. January non-farm payroll report will be published on February 11, while the January CPI is scheduled for release on February 13. Meanwhile, the market is also assessing the progress of Kevin Warsh’s nomination to the Federal Reserve and its potential impact on the expected path of interest rate cuts this year.
Editor/Stephen
