Silver plummets from its highs, with silver futures dropping over 6% at one point, as profit-taking, a stronger US dollar, and the impact of Indian tariffs converge.

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After five consecutive days of gains as of Monday, the silver market began to fluctuate at high levels and suffered a major sell-off on Thursday.

On Thursday, June 14, Eastern US time, the main COMEX July silver futures contract in New York maintained a decline throughout the day. After the US stock market closed, it fell below $83.80, hitting a new daily low as the day's loss expanded to 6.3%. On Monday, silver futures recorded the longest streak of gains since February 25, with the closing price approaching $86 per ounce and hitting a new high since March 10.

Compared to gold, silver has experienced significantly more volatility recently. Previously, driven by the Middle East situation, rising inflation expectations, and optimistic outlook for industrial demand, silver prices soared by more than 15% over several days, but market sentiment shifted sharply downward on Thursday.

Profit-taking at high levels: Silver's previous rally was too strong

Analysts generally believe that this round of sharp decline was primarily a technical correction following the rapid price increase.

On Monday, New York silver futures rose by more than 6%, marking the largest daily gain since February 27, with the cumulative rise over the past five trading days nearly reaching 17%. Media reports pointed out that investors had previously concentrated their bets on silver, which has both “safe haven” and “industrial metal” attributes, making its performance significantly stronger than gold.

After the rapid surge, long positions had become noticeably crowded.

Kitco previously cited market participants who noted that after silver prices broke through $80, large amounts of trend-following funds, CTAs, and short-term leveraged capital rushed in, putting the market in a highly fragile state. Once upward momentum weakened, this could easily trigger algorithmic profit-taking and position closures.

Thursday's sharp decline was viewed by many traders as a typical “stampede-like pullback after overheating.”

Dollar and US Treasury yields rebound, pressuring precious metals

Macro-level pressure is also impossible to ignore.

On Thursday, the dollar index rebounded sharply and US Treasury yields remained high, weakening the appeal of the zero-yield assets like silver and gold. Similar situations occurred in March, when silver prices plunged 15% in a single day. Investing.com quoted analysis saying that a stronger dollar and higher Treasury yields significantly increase the opportunity cost of holding precious metals.

At the same time, market expectations for a near-term Fed rate cut have cooled.

Although some institutions believe that the Fed's "policy stalemate" is beneficial to silver's long-term performance, in the short term, as long as US economic and inflation data remain resilient, high real interest rates will continue to suppress the valuation of precious metals.

India suddenly raises import tariffs, raising demand concerns

Uncertainty on the demand side also became an important trigger for Thursday's market sell-off.

This week, the Indian government suddenly raised import tariffs on gold and silver from 6% to 15% in an effort to curb precious metal imports and ease pressure on foreign exchange reserves. According to reports, India's domestic gold and silver futures prices surged after the news, but the market soon became concerned: high tariffs may suppress demand in one of the world's largest physical precious metals markets.

Kitco's analysis suggests that India's policy changes will directly impact physical silver demand, especially in the jewelry and investment bar markets. For silver, which had already surged, any sign of slowing demand will amplify market volatility.

Outlook: Long-term logic remains, but volatility may become the norm

Despite Thursday's sharp decline, many institutions remain relatively optimistic about the mid- to long-term outlook for silver prices.

HSBC recently raised its silver price targets for 2026 and 2027, believing that the energy transition, photovoltaic demand, and continued global supply shortages will continue to support the long-term price base for silver. However, the bank also warned that after a sharp short-term surge, "further upside may be limited" and that there is clear risk of a short-term correction.

Kitco recently noted that the global silver market has experienced a supply deficit for consecutive years. ETF capital inflows and growth in industrial demand remain important bases supporting silver prices.

Some analysts even believe that silver is undergoing a "structural revaluation."

On one hand, silver combines attributes of both precious metals and industrial metals. On the other hand, rapid expansion in AI data centers, electric vehicles, and the solar industry are continuously driving up industrial silver demand. Kitco said that silver breaking through $80 to some extent reflects changes in the global economic structure.

However, many traders also caution that compared to gold, the silver market is less liquid and has a higher proportion of leveraged capital, which often amplifies its volatility.

In other words, silver may continue to hold a “long-term bullish, short-term highly volatile” status.

Risk Warning and Disclaimer ClauseThe market is risky and investment should be approached with caution. This article does not constitute personal investment advice, nor does it take into account individual users' special investment objectives, financial conditions, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article fit their specific circumstances. Investment based on this article is at your own risk. ```