The silver market experienced dramatic volatility on Thursday, with prices plunging over 7% before partially recovering to close more than 5% lower. This sharp movement followed the Trump administration's decision to suspend planned import tariffs on silver and other critical minerals.
The policy reversal alleviates market concerns about potential hoarding behavior and excessive silver inflows into U.S. warehouses. Data shows inventories at COMEX-affiliated warehouses have ballooned to 434 million ounces - approximately 100 million ounces higher than levels seen a year ago when tariff tensions escalated.
However, StoneX analyst Rhona O'Connell cautioned that silver remains on the U.S. critical minerals list, leaving the door open for future export restrictions. The administration has opted for bilateral negotiations rather than immediate tariffs, with discussions potentially including price floor mechanisms.
"This strategic pivot introduces fresh uncertainty into the silver market," O'Connell noted, highlighting the potential for ongoing policy fluctuations.
OCBC strategist Christopher Wong maintained a cautiously optimistic medium-term outlook despite the short-term turbulence. "Silver's fundamentals remain supportive," Wong observed, citing tightening supplies, robust industrial demand, and positive spillover from gold's rally as key price drivers.
Market participants are advised to closely monitor policy developments while carefully analyzing supply-demand dynamics to navigate the evolving investment landscape.