Summary of Silver Market Dynamics

On February 5, 2026, silver prices experienced a significant decline, dropping over 10% to below $80 per ounce. This sharp correction follows a record rally in 2025, where silver prices had surged nearly 200% year-on-year. The recent downturn is attributed primarily to forced liquidations of leveraged speculative positions rather than a collapse in supply-demand fundamentals.

Immediate Causes of the Decline

The immediate catalyst for the price drop was the reaction of the market to decisions made by the CME, which imposed higher margin requirements. This particularly affected heavily leveraged short-term speculators who were holding long positions from the peaks above $120. The drop below $80, followed by a brief rebound, aligns with typical market behavior of profit-taking and unwinding excessive leverage.

Broader Macro Factors

Several macroeconomic factors are also influencing silver prices. The appointment of a new chair at the Federal Reserve has diminished the attractiveness of precious metals, contributing to a stronger US dollar. Earlier gains in silver were largely driven by expectations of aggressive interest rate cuts, which have since been revised. This shift in expectations has led to a capital rotation towards equities, especially in the technology sector, which has shown strong performance.

Market Outlook

Following the recent correction, the silver market remains highly volatile. Analysts anticipate that extreme price fluctuations could continue in the coming weeks, with the potential for further declines or sharp rebounds at any moment.