Friday witnessed a dramatic end to silver’s dream run. The precious metal, which had staged an unprecedented rally throughout January, faced a severe sell-off triggered by a personnel announcement from the White House. Widespread investor flight, compounded by forced liquidations, created a powerful downward spiral in the commodity markets.
A Hawkish Fed Nominee Sparks the Sell-Off
The brutal wave of selling was ignited by President Donald Trump’s nomination of Kevin Warsh as the new Chair of the U.S. Federal Reserve. Warsh, who previously served as a Fed Governor from 2006 to 2011, is viewed on Wall Street as a monetary policy “hawk.” This appointment dashed the hopes of many market participants for a continuation of loose interest rate policy under a more dovish candidate.
The reaction was immediate: the U.S. dollar appreciated sharply against major currencies. Since commodities like silver are predominantly priced in dollars and often move inversely to the greenback, the metal came under intense pressure. What began as profit-taking rapidly escalated into an avalanche of selling.
Key Figures at Market Close:
* Closing Price: 85.14 USD
* Daily Loss: -26.47%
* Distance from 52-Week High: -27.17%
* Volatility (30-Day): 95.70%
Leveraged Bets and Margin Calls Accelerate the Decline
The plunge to 85.14 USD was significantly exacerbated by technical factors. Numerous short-term speculators had placed leveraged bets on continuously rising prices in the preceding period. As the price fell, it triggered margin calls: brokers forced traders to liquidate their positions to cover losses.
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These forced sales hit a market already trending downward, violently accelerating the negative momentum. Market experts describe this as a correction in a massively overheated market. As recently as January 28, 2026, silver had marked a 52-week high at 116.89 USD. Friday’s crash brought the price nearly back to its 50-day moving average level of 81.65 USD.
Industrial Demand Provides a Fundamental Backstop
Despite the current shock, silver’s long-term fundamental drivers remain relevant. Industrial demand, particularly from the photovoltaic sector and electric mobility, continues to provide a crucial base of support. The solar industry alone requires vast quantities of the conductive metal for capacity expansion.
However, reports from major Chinese solar manufacturers indicate that extremely high silver prices increase the pressure to find cheaper substitute materials. This could dampen physical demand in the medium term should prices climb back toward record highs.
A Phase of Extreme Uncertainty Persists
The silver market is now in a period of exceptional uncertainty. With an annualized volatility reading of nearly 96%, investors must brace for continued severe price swings. Speculation regarding future monetary policy will dictate market direction until the official Fed leadership transition in May 2026. A critical test for establishing a price floor will be whether the key support around the 50-day moving average can be defended in the coming week.
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