Silver (CM:XAGUSD) prices saw extreme swings during thin holiday trading on Monday. Shortly after futures opened at 6:00 PM ET, prices jumped to a record $83.75. However, within just over an hour, silver fell sharply to $75.15. The fast move caught many traders off guard and raised questions about what drove such sharp action.
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At first, markets focused on changes in expectations about future U.S. policy. Investors are now watching the planned Federal Reserve leadership change in 2026. As a result, many expect a chair aligned with President Donald Trump and a higher chance of rate cuts. Since lower rates often weaken the dollar, silver drew buying as a hedge against dollar risk.
Supply Stress and Industrial Demand
In the meantime, silver markets remain tight. Global supply is near 850 million ounces per year, while demand is closer to 1.16 billion ounces. This gap of more than 300 million ounces has pushed buyers to pay about 7% premium for near-term delivery. In addition, demand for solar panels, electric vehicles, electronics, and batteries continues to grow.
Meanwhile, China plans to introduce new export controls starting January 1, 2026. This added concern about supply availability and supported prices during the initial surge. Together, these factors created a strong interest in both physical silver and futures contracts.
Why Prices Reversed So Fast
However, the sharp pullback reflected market structure rather than a change in outlook. Trading volumes were light during the holiday period, reducing depth in futures markets. As prices climbed quickly, many short-term traders took profits. Once prices began to fall, stop orders added selling pressure, accelerating the decline.
Looking ahead, analysts expect silver to stabilize between $75 and $79 in the near term. Even so, longer-term drivers remain in place. Tight supply, steady industrial use, and shifting policy expectations continue to support silver as both a growth metal and a hedge asset.
We used TipRanks’ Comparison Tool to line up notable commodity ETFs, including iShares Silver Trust (SLV). This tool helps investors gain a clearer view of recent price moves, long-term performance, fees, and assets under management across major commodity funds.
