Silver Price Falls as Historic Short Squeeze Begins to Ease

Silver Price Falls Amid Easing Short Squeeze

Silver prices dropped by up to 3.6% after reaching an all-time high of $53.55 an ounce during volatile trading in London. The historic short squeeze pushing silver prices to unprecedented levels is now showing signs of easing. Traders have taken advantage of arbitrage opportunities between London and New York by shipping silver bars across the Atlantic. This activity has narrowed the price gap and started to reduce borrowing costs for silver in London. However, lease rates remain elevated.

The surge in silver prices partly results from a mismatch between paper contracts and physical supply. Strong demand from India and inflows into silver-backed ETFs have driven this mismatch. Although silver is exempt from recent U.S. tariffs, ongoing concerns about potential new levies under the U.S. Section 232 probe create market uncertainty.

Impact on the Precious Metals Market and Future Outlook

Gold and other precious metals have surged this year, with gold reaching record highs due to central bank purchases and geopolitical tensions. Silver’s smaller and less liquid market faces a higher risk of sharp corrections if investment flows slow. Goldman Sachs analysts warn that without central bank support, even minor pullbacks could cause disproportionate price declines.

Despite recent price falls, silver remains a key focus. Traders watch supply constraints, borrowing costs, and geopolitical factors closely, as these will influence its next moves.

SuperMetalPrice Commentary:

Silver’s recent price volatility underscores the fragile balance between physical supply and paper market dynamics. The easing of the short squeeze offers some relief but highlights ongoing market risks. Investors should monitor borrowing rates and geopolitical developments, especially U.S. tariff policies, which could drive further price swings. The silver market remains a key barometer for broader precious metals trends amid rising global economic uncertainties.