In the history of the silver market, prices had traded above $40 an ounce for only a handful of brief periods before last year. On Friday, exhausted traders watched in shock as the precious metal plunged by that much in less than twenty hours. For weeks, traders across the metals world have spent their nights glued to screens as prices for everything from gold to copper and tin seemed to break free from the gravity of supply and demand fundamentals, spurred higher on a wave of hot money from speculators in China.
And then, in just a few hours, the rally reversed into one of the most dramatic crashes ever seen in commodity markets. Silver’s 26% plunge on Friday was the biggest on record, while gold dropped 9% in its worst day in more than a decade. Copper traders were already reeling after a sudden spike past $14,500 a ton that unravelled just as fast.
Precious metals extended that decline as Asia began a new week, before paring some of the losses in volatile trade. Spot gold dropped as much as 4%, while silver fell nearly 12% before reversing course and turning higher. “In my career it’s definitely the wildest that I have seen,” said Dominik Sperzel, the head of trading at Heraeus Precious Metals, a leading bullion refiner.
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“Gold, it’s a symbol of stability, but such a move is not a symbol of stability.” While the trigger for Friday’s crash was the news that US President Donald Trump planned to nominate Kevin Warsh to lead the Federal Reserve, which sent the dollar higher, many had been warning that the metals markets were overstretched and due for a correction following weeks of relentless surges. Still, the speed and scale of the drop was breath-taking, particularly for a market as large and liquid as gold. Metals traders in Europe and the US have been working around the clock, unwilling to miss the Asian trading day when many of the sharpest moves have taken place — and even frantically trading through long-distance flights.
At the world’s biggest coin conference taking place in Germany last week, executives stood staring at their phones, watching in silence as the crisis unfolded. “Parabolic,” “frenzied” and “untradeable,” were all descriptions of the market on Friday, wrote Nicky Shiels, head of metals strategy at MKS PAMP SA. January 2026, she said, would go down as “the most volatile month in precious metals history.” Gold’s rally has been building for a number of years, as central banks expanded their holdings as an alternative to the dollar, and accelerated last year as western investors piled into the so-called debasement trade.
But the gains have taken on a more frenzied pace in recent weeks, driven by a wave of buying from Chinese speculators — from individual investors to large equity funds venturing into commodities — that has lifted metals from copper to silver to fresh records. As prices surged, trend-following commodity trading advisors piled in, adding more froth to the rally. “We had identified about three or four weeks ago that it turned into a momentum trade, not a fundamental trade,” said Jay Hatfield, chief investment officer at hedge fund Infrastructure Capital Advisors.
“We were just riding it, waiting for this type of thing to happen.” With concerns over the independence of the Fed and geopolitical confrontations from Venezuela to Iran capturing the headlines, the rally in metals became a symbol of some investors’ growing distrust of the US dollar. As metals’ upwards momentum drew more and more buyers, gold and silver fever gripped shoppers from China to Germany — in scenes reminiscent of 1979-1980, the only other time in modern history that the markets have seen such dramatic swings in price.
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