Silver plunged more than 30% in a single day, tumbling to under $80 per ounce in a shock move that stunned metals investors and traders across markets. Gold also slid, but the sell-off in silver was far more dramatic.
What drove the drop
- Analysts point to heavy profit-taking after a blistering rally, overbought technical conditions and a resurgent U.S. dollar as the main triggers for the sharp correction.
- Sentiment shifted quickly after news that President Trump plans to nominate Kevin Warsh for Fed chair. Market participants interpreted the move as dollar-positive: Warsh, who served as a Fed governor from 2006–2011, is widely viewed as hawkish and likely to preserve the Fed’s institutional credibility — a backdrop that supported USD strength and prompted some investors to exit precious metals.
Context on the rally and the reversal
- The fall came after an extraordinary run: gold has more than doubled since last year, while silver surged to nearly four times its price a year ago and had reportedly doubled since December alone. Silver had been rallying on supply deficits and momentum buying.
- As recently as a day before the crash, spot silver had eased 2.1% to $114.141 after peaking at $121.64, leaving it up more than 60% for the month — illustrating how quickly gains can unwind when profit-taking accelerates.
What traders are watching next
- Market participants are now focused on the U.S. jobs report for January, due Feb. 6 at 8:30 a.m. ET. The data will be parsed for clues about rate-cut expectations: a stronger-than-expected jobs print could bolster the dollar and pressure precious metals further, while weaker data might revive hopes for looser policy and support safe-haven assets.
- Crypto and other risk markets will also be watching for spillover effects as dollar strength and changing rate expectations can influence flows into alternative stores of value.
Bottom line: after a powerful run-up, silver’s sudden rout highlights how quickly momentum can reverse when profit-taking, technical overstretch and a firmer dollar converge. Traders should brace for continued volatility as macro headlines and upcoming economic data shape rate expectations and safe-haven demand.
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