Gold prices tumbled and silver suffered its worst drop since the Covid pandemic amid turmoil in precious metal markets.
Spot silver fell 11pc on Monday to around $72 (£53.36) per ounce after prices briefly spiked to a fresh high of almost $84 per ounce earlier in the day.
The plunge in silver spread to gold, which fell to $4,332 per ounce. The yellow metal has also had a strong year, though its 65pc increase is just half that seen in the silver market.
Silver’s fall came as exchange operator CME Group announced higher margin requirements for those buying the metal, a move designed to reduce risk in the volatile market and a sign there may be further price turmoil ahead.
Monday’s price swings cap off a spectacular year for silver, which has risen by 150pc from below $30 at the start of 2025.
Precious metals such as gold and silver have led the charge of so-called “safe haven” assets rising in the past year because of geopolitical turmoil.
Political fears often push up their price as investors seek traditional physical assets.
Michael Haigh, Societe Generale’s global head of commodities research, said prices had been more volatile on Monday because of very low trading volumes during the year end.
He said: “These markets become much less liquid – the volume of trading of future contracts really drops off quite a lot as you go through the festive period and into the New Year.”
Mr Haigh added: “The silver market is 10 times smaller than the gold market in terms of volumes of trading.
“What that means is for anyone who is left trading in that period, if their trades are of notable size, they are going to move the market much more greatly than would normally happen.”
In turn those traders sell their holdings once markets move abruptly upwards, to lock in that profit.
‘There is undoubtedly a bubble in silver’
Silver had risen sharply in the days after Christmas following China’s announcement it would restrict exports of the white metal.
However, the recent decline will raise fears that further turmoil is ahead.
Kathleen Brooks, analyst at XTB, said: “There is undoubtedly a bubble in silver.
“Speculative interest in silver, which has seen it rise by an astonishing 28pc in the past month, is also a driver of silver’s volatility as we near year end,” she said.
But she added that “China is stockpiling silver, so that could limit any downside”.
In October, London traders struggled to get hold of enough silver in an unprecedented short squeeze.
It came as record prices hammered investors who had taken short positions in anticipation of a fall in the market, forcing them to hunt down supplies of the metal which they could rent or buy in an effort to cap their losses.
On top of that, a range of central banks around the world have bought heavily into metals as an alternative to holding other reserves such as US dollar assets, pushing up prices.
Silver also retains industrial uses in products such as solar panels, further boosting demand.
