Silver’s Stunning Rally Meets a Sharp Year-End Reversal

As 2025 draws to a close, silver investors are facing a turbulent finale. The white metal, having posted one of its most impressive annual performances in decades, is now undergoing a significant correction. A combination of profit-taking and forced liquidations has abruptly shifted momentum, though a major fundamental supply shock looms just days away with China's impending export restrictions.

The precious metal's price action has turned volatile as the year ends, currently trading at $71.29 following a sharp pullback. This represents a decline of approximately 13% from its 52-week high of $81.66, recorded on December 28. The swift reversal highlights the market's sensitivity to both technical and regulatory pressures after an extraordinary rally.

A key catalyst for the recent selling pressure originated from the Chicago Mercantile Exchange (CME). The derivatives marketplace raised margin requirements for silver futures contracts to $25,000, marking the second such increase this month alone. This adjustment compelled numerous leveraged traders to unwind positions to meet the new collateral demands, amplifying downward pressure and pushing the price firmly below the $80 threshold.

Despite this setback, silver's annual performance remains remarkable, boasting gains of around 150% for the year. This surge has dramatically outpaced other major asset classes, including gold and the S&P 500 index.

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The Looming Supply Shock from China

While short-term factors drive the current correction, the fundamental landscape for silver is tightening. A pivotal change is scheduled for January 1, 2026, when China's new export restrictions on the metal take effect. Given silver's critical role in manufacturing solar panels, powering data centers, and producing electric vehicles, these constraints will hit an industrial sector with consistently robust demand.

The timing of this policy shift is significant. It suggests the market's focus will soon pivot from near-term, liquidity-driven selling to concerns over the physical availability of silver for global industry.

Currently, a strengthening US dollar is applying additional pressure on dollar-denominated commodities like silver, making them more expensive for international buyers. Market observers largely interpret the present correction as a necessary consolidation, coming after a period of extreme volatility where annualized swings exceeded 60%.

The transition into the new year represents a clear inflection point for silver. The convergence of technical profit-taking and an imminent structural reduction in supply sets the stage for a complex and potentially volatile opening to 2026.