- Silver prices came under pressure after the CME Group raised margin requirements on silver futures, prompting a pullback in the market.
- Despite the recent dip, silver is on track for an impressive annual gain exceeding 150% in 2025, marking its strongest yearly performance in years.
- Minutes from December’s Federal Open Market Committee (FOMC) meeting revealed that most participants favored pausing further rate cuts if inflation continues to decline, adding caution to market sentiment.
Silver price (XAG/USD) gave back nearly all of its 4.5% gain from the previous session, trading near $72.50 during Asian hours on Wednesday. The metal came under selling pressure after the CME Group increased margin requirements on silver futures, prompting leveraged traders to reduce positions amid technically stretched prices.
Analysts say the pullback mainly reflects position unwinding rather than a decline in fundamental demand.
Nonetheless, silver remains on track for a remarkable annual gain exceeding 150% in 2025, marking its strongest yearly performance in recent history. The rally gained momentum following U.S. President Donald Trump’s global tariff rollout and has been further supported by ongoing geopolitical tensions, U.S. rate cuts, and robust industrial demand—particularly from the solar, electronics, and data center sectors.
Silver’s rally has been further driven by a surge in speculative demand in China, pushing premiums on the Shanghai Futures Exchange to record highs. These elevated premiums reflect intense local buying and have tightened global supply chains, echoing earlier inventory squeezes in London and New York vaults.
Meanwhile, minutes from the Federal Open Market Committee’s (FOMC) December meeting, released Tuesday, showed most participants favored pausing further rate cuts if inflation continues to ease. Some officials also advocated holding rates steady after three cuts this year designed to support a weakening labor market.
Demand for safe-haven metals, including silver, has risen amid ongoing geopolitical tensions. Uncertainty surrounding a Russia-Ukraine peace deal, renewed conflicts in the Middle East, and frictions between the U.S. and Venezuela have all contributed to increased investor appetite for precious metals.
Sources: Fxstreet
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