On December 29, silver prices dropped by more than 10% in under 12 hours, sending shockwaves through the precious metals market. After making an intra-day high of $84, silver prices fell by over $7 in spot markets and over $6 in futures trading in a single day’s session. Silver futures had made an intraday high of $82.67, which later fell to $71 due to heavy selling pressure.
Why Silver Price Crashed
The significant decline in silver prices on Monday is being attributed by markets to CME’s modification of margin limitations.
The Chicago Mercantile Exchange’s decision to increase overnight margin requirements to $25,000—the second increase this month—is likely to have contributed to the severity of silver’s slide.
“Monday’s selloff was amplified by the CME’s decision to raise margin requirements on silver futures, forcing leveraged traders to reduce exposure after prices became technically overstretched. The decline reflected position unwinding rather than a shift in underlying demand,” says Jigar Trivedi, Senior Research Analyst at Reliance Securities.
It was the steepest daily drop in over five years, and profit-booking by traders is also being highlighted as the reason or the bog fall.
Silver price crash on Monday holds importance for the markets. Jim Wyckoff, a commodity market veteran, in a piece written for Kitco, said, “Strong follow-through selling pressure on Tuesday or Wednesday would likely produce more serious chart damage that would better suggest near-term market tops are in place.
And if gold and silver prices bounce back strongly in the next couple of days, then today’s price lows would be the latest “reaction lows” in the present price uptrends. In other words, trading action the next two days in gold and silver will likely be extra, extra important in determining price direction for the coming weeks.”
The next millstone for Silver is breaching the $100 mark. Whether it happens, only time will tell.
What is Margin Requirement
Futures margin is the amount of money that you must deposit and keep on hand with your broker when you open a futures position. It is not a down payment and you do not own the underlying commodity. Futures margin is different from the securities margins.
In times of significant market fluctuations, characterized by increased daily price volatility, clearinghouses may implement stricter margin requirements. This adjustment aims to mitigate the heightened risks associated with rapidly changing market conditions.
An example: Let’s say the initial margin is $8,000 and the maintenance margin is $6,500. If the account value falls to $4,200, the Clearing House will require more funds to bring your account up to $8,000.
Silver Price on Tuesday
Silver seems to have found support after the big slide. On Tuesday, silver recovered and traded around $75/ounce, up by 2.3%. Silver continues to be the best-performing precious metal of 2025 despite today’s sell-off, with spot market gains of about 150% for the year.
The geopolitical environment remains tense despite potential peace negotiations that emerged following a meeting between U.S. and Ukrainian presidents.
Another key event is waiting to happen with China implementing export restrictions starting January 1. How it plays out remains to be seen. China has announced that silver exports will be restricted starting in 2026, and businesses will be required to apply for export licenses. This policy will be in effect until 2027.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.