Silver experienced a dramatic decline, dropping over 35% in a single day to approximately $74, marking the largest intraday fall in its history before recovering to about $82. Gold also saw a significant drop of over 12%, falling to nearly $4,700 after reaching all-time highs of more than $5,500 earlier this week.
This selloff followed a historic surge in both metals, where silver surpassed $120 and gold achieved record levels, driven by inflation hedging, a weak dollar, and speculative trading. The sharp decrease in prices on Friday highlighted a sudden change in market sentiment as traders began to secure profits amidst increasing macroeconomic uncertainty.
Why did silver and gold prices fall so drastically? The recent volatility in precious metals coincided with a broad shift in market attitudes after President Donald Trump nominated Kevin Warsh to lead the Federal Reserve. Warsh is perceived as having a more hawkish stance towards monetary policy, which alleviated concerns regarding central bank independence and indicated a potentially tighter approach to interest rates moving forward.
Bond markets mirrored this adjustment, with the yield on the 10-year Treasury bond rising to around 4.25%. Following this trend, the US dollar index, which had recently dipped to a four-year low, increased by about 0.7% as expectations for interest rates strengthened.
The collapse in silver erased over $1.2 trillion in market capitalization, as prices fell from near $100 per ounce to the mid-$70s. Though silver has seen some recovery, its market capitalization remains around $4.2 trillion.
The fallout allowed NVIDIA to surpass silver in market valuation, making it the second-largest asset globally with a market cap of approximately $4.6 trillion, according to data from Companies by Market Cap.