Silver price approaching a turning point? Speculative positions withdraw massively to a 22-month low, silver "bull market narrative" suffered a heavy blow.

Leveraged hedge fund managers and a wider camp of speculators have cut their bullish long positions in silver to near two-year lows on the eve of the Trump administration's decision to temporarily not impose import tariffs on key minerals including silver. This explains why the spot and futures prices of silver have experienced unusually sharp fluctuations in the past two days - that is, leveraged hedge funds and short-term high-frequency speculators who were previously bullish on silver have withdrawn in large numbers. It is worth noting that, unlike the support for the rise in gold prices, the funding behind silver, which has strong industrial demand, focuses on high-frequency trading and stock market momentum strategies, also known as "short-term fast money." This type of funding is the core driver of the current super bull market in silver. In contrast, the purchasing power of central banks and long-term hedging funds provide strong support for gold. In recent days, the trading price of silver, the hottest precious metal globally, which has been continuously soaring and hitting historic highs for several days, has experienced a significant pullback. This is mainly due to U.S. President Trump's announcement of a temporary suspension of import tariffs on key mineral resources, leading to a sharp decrease in the market's panic-driven bullish sentiment for silver. By the end of Friday's stock market close, the spot price of silver fell from its historical high of $93.737 on Wednesday to $90.119, with a cumulative decline of 3% over Thursday and Friday. The volatility during Thursday's trading session was extremely intense, with silver dropping by more than 7% at one point. The pace of silver's pullback reflects its high volatility and speculative nature. The futures price of silver for the near month also fell by 4% on Friday, closing at $88.537. After a significant increase of over 20% in the past four trading days, silver has experienced a rebound in buying trajectory. Besides the macro-level impact of the U.S. government's delay in imposing tariffs leading to a temporary avoidance of rush buying in the U.S. market, the majority of the decline is likely due to profit-taking by speculative funds in silver and the selling pressure of billions of dollars resulting from the rebalancing measures of the Bloomberg Commodity Index (BCOM). Over the past week up to January 13, hedge funds and other large speculative institutions have reduced their net long positions in silver by about 15%, to 15,045 contracts. According to the latest U.S. government statistics, this bullish contract count is at its lowest level in 22 months. The continued threat of tariffs on silver and other minerals by the Trump administration was one of the key driving factors behind the dramatic rise in precious metals such as silver. However, U.S. President Donald Trump decided in the early hours of Wednesday to temporarily postpone the full implementation of tariffs, although he did not rule out the possibility of doing so in the future. With Trump stating that he will ensure the supply of critical minerals through bilateral trade negotiations, concerns in the U.S. commodity market about tariffs on silver, platinum, and palladium have temporarily eased. As a result, the recent sharp gains in silver and platinum group metals have seen significant retracements. By the time of this report, both platinum and palladium had fallen by over 3% on Friday, with a daily drop of over 5% on Thursday for both metals. According to a statement released on Wednesday night local time, the Trump administration proposed setting a floor price for imported products - not just imposing tariffs based on percentages - to develop a growing industrial supply chain system in the U.S., but did not rule out the possibility of announcing tariffs in the future. "This order indicates that the Trump administration will take a more targeted approach rather than a more broad strategy when making future decisions," said Daniel Ghali, Senior Commodity Strategist at TD Securities in a report. He emphasized that, undoubtedly, the significant easing of fears about broad policies in light of the sharp declines in silver and platinum prices unintentionally affects the fears that support benchmark precious metal prices. While silver has experienced a sharp decline, gold continues to show its "safe haven" nature. Some Wall Street analysts remain bullish on gold even amidst the sharp decline in silver. They believe that silver, compared to gold, has higher volatility and uncertainty, as silver does not have the reserve demand from central banks globally to support its price, making it more susceptible to speculative fund flows. According to the latest Markets Pulse survey, the upward momentum in gold driven by strong global central bank purchases is expected to continue after January, indicating that the price of gold, which has surged by 70% over the past year and has hit new highs repeatedly, is likely to continue rising. The trend of gold relies more on safe-haven demand, central bank purchases, and systemic fund allocation, making its upward momentum relatively more stable. Silver, on the other hand, is more susceptible to the influence of large short-term speculative funds, leading to increased volatility. Therefore, Wall Street tends to approach its short-term trends with more caution. Unlike silver, gold has the long-term support of central bank reserve demand, risk allocation, and institutional allocation. Silver may not have the same resilience as gold - after all, speculative funds dominate silver while the central bank's purchasing power supports gold. Therefore, intense volatility may become a norm for silver in the near future. Although silver, along with copper and platinum group metals, has reached similar milestones of hitting new highs, signs of wavering are beginning to appear as investors continue to weigh the persistence of supply constraints and the profit-taking choices of large speculative funds moving into these commodities, apart from gold. The recent geopolitical tensions may further deteriorate, combined with the Trump administration's ongoing threats to the Federal Reserve's monetary policy independence and the continuous collapse of the "American exceptionalism" narrative during Trump's term, leading to the devaluation of the dollar, selling off of U.S. bonds, and other factors. This has collectively driven global central bank reserves and safe-haven fund flows towards ancient precious metals such as gold that can hold their value in the long term. Analysts from ANZ Bank recently stated that the ongoing geopolitical turmoil and the backdrop of safe-haven demand should continue to boost global demand for gold. The analysts point out that factors such as geopolitical tension, loose global monetary policy, rising U.S. debt burden, and concerns about the independence of the Federal Reserve will collectively support expectations for gold to surpass the $5,000 per ounce super milestone in the latter half of this year. Analysts from Citigroup have even more bullish expectations for precious metals recently, forecasting that gold could surpass $5,000 in the next 3 months. Citigroup states that in the unprecedented high-price trend, the continuous deterioration of global geopolitical situations and the uncertainties brought by the Trump administration regarding the global economic outlook and currency value, as well as physical metal shortages, combined with threats to the independence of the Federal Reserve, provide crucial support for their predictions. In a bullish scenario, the Citigroup analyst team has raised their target price for gold for the next 0-3 months from $4,200 per ounce to $5,000 per ounce.