Gold (GC=F) and silver (SI=F) plummeted after hitting all-time highs, bringing the parabolic move in the precious metals sector to an abrupt end.
Gold futures fell more than 4%, hovering near $4,340. Silver futures fell nearly 8% after briefly touching $80 an ounce.
Traders are on edge ahead of the start of Monday’s session after the Chicago Mercantile Exchange raised margin requirements for silver futures, forcing highly leveraged traders to either add cash or sell positions.
Meanwhile, China, the world’s third-largest silver miner, is expected to restrict exports from January, fueling concerns about supply competition in the booming artificial intelligence industry.
Over the weekend, Elon Musk weighed in on the explosion in silver prices, writing on X, “This is not good. Many industrial processes require silver.”
Learn more about today’s market moves
Nearly 60% of silver is used in industrial applications, according to the Silver Institute, a nonprofit trade group.
Silver is the best conductor of electricity of all metals and is an important component of solar panels, data center server motherboards and electric vehicles.
“It’s critical to electronics and computing. It’s used in almost every device that has a switch,” Silver Institute President and CEO Michael DiRienzo told Yahoo Finance.
DiRienzo noted that silver has entered its fifth year of global structural market deficits. In October, the metal was added to the U.S. critical minerals list, sparking concerns it could face tariffs and trade restrictions.
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The precious metal has had a stellar year, with gold prices soaring 67% so far this year, driven by strong central bank buying and a weaker dollar.
Silver is a much smaller market but has had a stellar year, rising nearly 150% as its industrial use creates a supply shortage. Even copper (HG=F) and platinum (PL=F) have soared to record levels this year.
But one precious metals bull has been warning of a reversal in gold and silver’s gains, noting that the last time they rose so quickly was in 1979, with prices peaking in 1980 before plummeting.
“When things get this tight, you have to be careful,” Mike McGlone, senior commodities strategist at Bloomberg Intelligence, told Yahoo Finance earlier this month.
“For someone like me who is always bullish on gold, the most important thing is two words: take profits.”
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on X: @ines_ferre.
