The silver bull market frenzy encounters a "tariff cooldown"! Speculative forces trigger a selling frenzy, with silver prices plummeting more than 7% at one point.

Recently, the trading price of the hottest precious metal globally - silver, saw a significant drop on Thursday, after silver futures prices soared for multiple days and reached historic highs. As of the early Asian trading session on Thursday, the price of silver fell over 4% to around $87.2, mainly due to President Trump's announcement of delaying tariffs on key mineral imports. This caused a drastic decrease in the bullish sentiment towards silver in the market. Silver had previously reached a historic high of $93.7 on Wednesday. This white metal plummeted by 7.3%, while gold also saw a decrease, though much smaller than silver, with a decrease of less than 0.5%. After a significant increase of over 20% in the past four trading days, silver experienced a correction, with the majority of the downturn possibly resulting from profit-taking by large speculative funds and the selling pressure brought about by the Bloomberg Commodity Index (BCOM) rebalancing measures. Over the past year, silver has nearly doubled in price, as in the first two weeks of this year alone, gold prices have risen by 7% and silver prices have surged by 29.5%. Gold and silver futures prices continued their strong upward trend on Wednesday, hitting new all-time highs by the close of trading. The main driving factors remain the potential for continued worsening of global geopolitical situations, particularly in countries like Venezuela, Cuba, and Iran. The risk of direct political/military conflicts between the latter two countries and the US is on the rise, exacerbated by the Trump administration's threats to the Federal Reserve's monetary policy independence, as well as the crumbling of the "America First" economic theory during Trump's term leading to a devaluation of the US dollar and selloff of US bonds. Trump's "tariff delay" triggers silver pullback When US President Donald Trump stated that he would ensure the supply of key minerals through bilateral trade negotiations, concerns in the US commodity trading markets about the impending tariffs on silver, platinum, and palladium temporarily eased. This led to a significant pullback in silver and platinum group metals, with platinum and palladium both falling nearly 5% at the time of writing. According to a statement issued on Wednesday night local time, the Trump administration proposed setting a minimum import price for products - rather than just levying taxes based on percentages - to further develop the US domestic industrial supply chain but did not rule out the possibility of future tariff announcements. "This order indicates that the Trump administration will take a more targeted approach to future decisions rather than a broader strategy," said Daniel Gally, Senior Commodity Strategist at TD Securities, in a report. He emphasized that although this method significantly alleviated fears of broad policies, as seen in the substantial drop in silver and platinum metal prices, this environment may inadvertently affect the fear sentiment supporting prices of benchmark precious metals. The widespread rally in commodity metals on Wednesday drove silver and gold to new heights, while LME copper and tin prices also soared, as investors turned to industrial and precious metal assets due to various geopolitical, economic, and supply chain tension risks. The frenzy of buying in the Chinese and US markets and the broader rotation of commodities continued to support the demand for precious and industrial metals. In recent weeks, the price of silver has experienced significant fluctuations, with its 14-day average true range - a market volatility measure - skyrocketing in just a few days. However, this trend is likely attributed largely to the strong technical factors dominated by speculative funds rather than fundamental driving factors. Ole Hansen, Head of Commodity Strategy at Saxo Bank AS, stated on social media, "Many of the phenomena observed by commodity traders on screens reflect forced flows, dynamic margin calls, option hedges, and short-covering, rather than genuine supply and demand price discovery mechanisms. In such an environment, technical support may lose reliability, stop losses are easily triggered, and even correct macro viewpoints are difficult to survive in the short-term market amidst speculative selling noise." As silver plummets, gold shows its "safe haven" nature The renewed threat by the Trump administration against the Federal Reserve has also significantly boosted the precious metals market recently, reawakening the "dump the dollar" trades, pushing some institutional investors to sell US bonds and allocate more funds into gold, a traditional safe-haven asset. The US detention of the Venezuelan leader, Trump's repeated threats of military occupation of Greenland, and the unstable situation in Iran have also contributed to the market's demand for the safe haven assets of gold and silver. According to the latest Markets Pulse survey, driven by multiple positive factors such as strong global central bank gold purchases, the uptrend in gold prices is expected to continue after January. This suggests that the gold price, which surged by 70% and hit record highs in the past year, is likely to continue rising. Despite the drop in gold on early Thursday, Asian gold ETFs still attract buying at dips. However, silver may not exhibit the same resilience as gold - after all, silver is dominated by speculative funds, while the central bank system purchasing power of gold provides strong financial support. Therefore, intense volatility may become the norm for silver in the near future. Although silver, copper, and platinum group metals have also reached similar record highs, signs of instability in funds flowing into these non-gold commodities are emerging as investors weigh the sustainability of supply constraints and choose to profit from large speculative funds. Additionally, the Chicago Mercantile Exchange (CME) tightened risk control standards this month. Starting from the close on January 13, the margin calculation method for gold, silver, platinum, and palladium has been adjusted from a "fixed dollar amount" to a "nominal value percentage". This shift means that margins will dynamically adjust in real-time with fluctuations in contract values. When silver prices spike sharply, the collateral required by commodity traders will increase proportionally. In the current high-volatility environment, CME's latest policy significantly raises the cost of highly leveraged speculative trading, forcing some "light and speculative long positions" to actively reduce their positions under margin pressure, serving to moderate overzealous sentiment. The analyst team at Shengbao Bank stated that any unilateral market trend will eventually hit historical ceilings, and the most probable brake for silver is the disruption of industrial demand.