Silver and Gold Sink in Biggest One-Day Drop (What Investors Should Watch Next)

Precious Metals Meltdown

After silver surged to fresh highs in 2025, reaching around US$79 per ounce, both silver and gold have seen a period of sharp profit taking. This pullback followed a powerful rally in late December, when gold climbed toward US$4,550 per ounce and silver briefly moved above US$80 per ounce, with some intraday spikes approaching US$83.

While the recent declines may appear abrupt, the primary driver has been short-term profit taking after an exceptional burst of demand rather than any material change in underlying fundamentals. Strategists have cautioned investors against reading too much into the near-term volatility, noting that such movements are common after strong price run-ups in precious metals.

From our perspective, these fluctuations reflect normal market behaviour as positions are reset, rather than a signal that the broader investment case for gold and silver has fundamentally weakened.

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ETF Selling Triggers Sharp Market Reversal

From a technical perspective, both gold and silver appeared overbought over the past two weeks, creating a natural opportunity for traders to lock in profits. This dynamic is amplified by the way many investors gain exposure to precious metals, particularly through paper gold instruments such as gold and silver ETFs.

These vehicles allow investors to access metal price movements without owning physical bullion, either by holding allocated gold or, more commonly, by using financial contracts that track the underlying price.

As a result, precious metals markets are highly liquid, which can intensify short-term price moves. When traders and institutions begin selling sizeable positions, capital can exit the market quickly, leading to sharper pullbacks than might be expected in physical bullion markets. In this context, the recent volatility reflects the structure of modern precious metals trading rather than a deterioration in demand fundamentals.

What dictates silver and gold price movements?

But what actually dictates the price of silver and gold?

To start with silver there has been many catalysts firstly silver perioce has been suppressed for many decades but more recently the supply and demand deficits have been growing larger as silver is one of the most highly conductive materials making it important in military equipment, EV and solar panels and a store of value for investors looking for safe havens so as demand for these technology has been increasing due to trade tension between china and japan this has caused a major shift in the demand for silver but also gold but that is moreso in a sentiment and safe haven asset.

But looking at the amcro environment when inflation begins to run higher and when the central banks begin to raise the supply of money which in tuen then devalues the dollar investors look for a store of value as interest rates begin to lower this improves the valuation not all the time but for most in tech but can also be a catalyst to demand for silver and gold.

The Investors Takeaway

For long-term investors considering an allocation to gold or silver, the question of whether these metals remain attractive is not a simple one. Commodities are among the most difficult asset classes to assess, largely because they are inherently volatile and influenced by a wide range of macroeconomic and behavioural factors.

That said, several supportive catalysts remain firmly in place. Ongoing geopolitical tensions, the scale of the US fiscal deficit, continued central bank balance sheet expansion, and market expectations for interest rate cuts in the US all provide a constructive backdrop for precious metals.

Against this setting, it is reasonable to expect gold and silver prices to remain supported over the medium to long term. However, the magnitude and timing of further upside are far less predictable, reinforcing the importance of viewing precious metals as long-term portfolio diversifiers rather than short-term trading instruments.