Summary of Precious Metals Market Update - February 6, 2026

On February 6, 2026, the precious metals market experienced significant movements, particularly in silver and gold. Silver prices surged by over 5%, reaching above $74 per ounce, while gold rebounded by approximately 2.5%, nearing $4,900 per ounce. This increase in silver was primarily attributed to technical factors rather than fundamental changes in the market.

Market Dynamics

Despite the recent surge, silver had previously experienced a sharp decline of about 12%. This drop prompted the CME (Chicago Mercantile Exchange) to raise margin requirements for silver futures from 15% to 18%, increasing the cost of holding positions and leading some investors to liquidate their trades. Analysts from JPMorgan highlighted that the elevated valuations of silver make it susceptible to significant sell-offs during periods of risk aversion.

Influencing Factors

The strength of the US dollar has been a notable headwind for precious metals, with the dollar remaining near two-week highs, which typically exerts downward pressure on metal prices. However, weaker labor market indicators from the US, including JOLTS, jobless claims, and the Challenger report, could potentially diminish the dollar's strength, especially if upcoming consumer sentiment data from the University of Michigan supports the narrative of a slowing economy.

China's Market Disruptions

In China, the local silver market faced serious disruptions, with the UBS SDIC Silver Futures fund experiencing a daily limit drop of 10%, now trading over 40% below its peak from January 26, yet still at a 29% premium to its net asset value (NAV). Analysts from Julius Baer noted a decline in industrial demand, particularly from solar panel manufacturers, and weaker jewelry demand, which could hinder a sustained recovery in silver prices.

Future Outlook

The CME has announced plans to launch new 100-ounce silver futures on February 9, pending regulatory approval. This could increase market activity but may also elevate volatility in the short term. The current correlation between silver and gold prices is at historically high levels, indicating that both metals are moving in tandem.

Conclusion

The recent volatility in the silver market is reminiscent of the significant price movements seen during the COVID crash in March 2020. As market conditions evolve, it is expected that volatility will remain elevated in the near term, influenced by both technical factors and broader economic indicators.