Silver prices rapidly plunge, dropping over 14% intraday! Analysts warn: Be careful buying the dip and getting caught in a trap

Silver prices plunged sharply on Thursday, breaking the two-day rebound momentum, which could indicate that the metal is facing significant difficulties in regaining an upward trend.

As of press time, London silver prices have fallen more than 14%, dropping from a high of $90 per ounce to $77 per ounce. The metal experienced a nearly 30% crash in just two days from last Friday to Monday, triggering a collective correction in the metals industry.

Gold also declined on Thursday, with London gold prices dropping over 2%, breaking below the $4900 per ounce level, but the overall decline was much milder compared to silver.

Analysts point out that speculative capital flows, leveraged positions, and options-driven trading have been the main drivers of recent silver price volatility, with physical demand having a relatively smaller impact. Amid spreading profit-taking sentiment and increasing investor caution, it is difficult for silver to regain an upward momentum in the short term.

Consolidation Expectations

Although the market lacks major news, it is important to note that the latest volatility in precious metals does not require any news to trigger it. The sharp correction since last week has already caused a volatility shock, which will take time to fully dissipate in the market.

Currently, both gold and silver prices are expected to enter a prolonged consolidation phase. Analysts warn that during this period, dip-buyers should remain cautious and avoid overtrading, especially when market sentiment is mainly driven by profit-taking.

Additionally, Goldman Sachs pointed out that the timing of the volatility suggests that Western capital flows, rather than Chinese speculative activity, are the main behind-the-scenes drivers of most market rises and falls. Most sharp fluctuations occur during Chinese futures market closures.

However, given that silver prices have surged over 140% in the past 2025 years, this consolidation also makes market sense. Rhona OConnell, Head of Market Intelligence at StoneX, warned that silver prices are severely overvalued, caught in a self-fulfilling frenzy, and that silver has historically been volatile with numerous examples of sharp crashes.

Furthermore, well-known investor and the real-life figure behind the movie “The Big Short,” Michael Burry, stated that recent declines in Bitcoin could trigger a chain reaction across the entire market, forcing institutional investors and corporations to sell other assets to cover losses, with gold and silver likely to be the first to be affected.

(Source: Cailian Press)