Silver prices experience a significant correction
According to the Commodity Market Analysis System of Shengyi Society, the silver market price on the afternoon of December 31, 2025 was 17004 yuan/kg, a decrease of 12.4% from the peak spot price of 19414 yuan/kg this month.
Futures market: On December 31, 2025, the main contract of Shanghai Bank (AG2602) continued to fluctuate widely but showed an extreme trend of “rising and then falling unilaterally”. The intraday fluctuations were more dominated by bears, as follows:
Opened at 18508 yuan/kg, briefly surged to a intraday high of 18877 yuan/kg after opening; Subsequently, due to the resonance of factors such as the sharp decline in the external market, the withdrawal of funds before the holiday, and the increase in margin, the price unilaterally declined and accelerated its plunge in the afternoon, reaching a low of 16900 yuan/kg; The final closing price was 17103 yuan/kg, a decrease of 1037 yuan or 4.23% from the previous trading day’s settlement price of 17859 yuan/kg, with a intraday fluctuation of 11.21%; The trading volume was 735900 lots, a significant decrease from 1442800 lots on the 29th, with a holding volume of 146800 lots, indicating a significant risk aversion and exit feature of funds.
Silver has repeatedly hit new highs before experiencing a significant pullback, which is the result of regulatory deleveraging, capital concentration for profit taking, holiday liquidity depletion, and technical overbought resonance. as follows:
Tightening regulatory policies and pressure on leveraged funds: On December 29th, CME raised silver margin by about 13.6% again (the third cumulative increase of over 25% within the year). In the previous period, the exchange simultaneously raised margin and limit up and limit down. High leverage long positions were forced to close due to pressure to replenish positions, triggering a “long kill long” chain of sell offs. Programmed stop loss orders emerged during the day.
At the end of the year, funds were concentrated for profit taking: silver increased by over 180% during the year, and institutions and funds faced year-end settlement and tax selling pressure, locking in profits in a concentrated manner; Approaching the New Year holiday, funds are hedging and leaving, and the fragile position structure is causing a stampede.
The drying up of holiday liquidity amplifies volatility: During the Christmas New Year holiday, market liquidity decreased by about 40% compared to normal days. Market makers had low willingness to quote, and the bid ask spread widened. A small number of large orders could trigger severe price fluctuations, exacerbating the extent of the correction.
Technical oversold repair: Silver RSI has been above 85 for several consecutive days, the gold to silver ratio has fallen to a nearly five-year low, and prices are out of touch with industrial demand such as photovoltaics and electronics. Technical correction pressure has accumulated, triggering large-scale stop loss and short covering.
Marginal cooling of geographical and macro expectations: rumors of peace talks in the Russia-Ukraine conflict heated up, and short-term risk aversion demand fell back; At the same time, the market’s expectation of a Fed rate cut has been overdrawn in advance, lacking new catalysts to push prices further upward.
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