Silver prices surged

According to SunSirs' commodity price analysis system, on December 29, 2025, the market price of silver was 19,186.67 RMB/kilogram, a 43.03% increase compared to the average market price of 13,414 RMB/kilogram at the beginning of the month (December 1st), and a 157.54% increase compared to the average market price of 7,450 RMB/kilogram at the beginning of the year (January 1st).

Futures Market: On December 29, 2025, the main Shanghai silver futures contract (AG2602) experienced wide fluctuations. It opened at 18,210 RMB/kilogram, dropped to a low of 18,027 RMB/kilogram before surging to a high of 19,998 RMB/kilogram. In the afternoon, it fell sharply, reaching a low of 17,500 RMB/kilogram. The daily fluctuation range was 13.79%, and the closing price was 18,887RMB/kilogram. Trading volume reached 1.4428 million lots, indicating a significant increase in activity. What happened in the market during the last hour of trading, when Shanghai silver futures went from being up over 10% to down over 2%?

What happened in the market during the last hour of trading, when Shanghai silver futures went from being up over 10% to down over 2%?

This one-hour "dramatic reversal" (from a gain of over 10% to a loss of over 2%) was a "multiple-party sell-off" stampede resulting from the confluence of supply and demand, macroeconomic factors, capital flows, policies, and external shocks. The core reasons included profit-taking at high levels coupled with drag from overseas markets, tightening risk controls and widening liquidity gaps amplifying volatility, limited support from inventory and warehouse receipts, a reversal in macroeconomic and risk-off sentiment, and a stampede of sentiment and capital across sectors. The specific reasons were as follows:

1. Profit-taking at high levels + panic selling off and a stampede effect:

With year-to-date gains exceeding 160%, the price of 19,998 RMB/kilogram lacked sufficient buying support, triggering algorithmic profit-taking and active liquidation by long positions. High-leverage accounts (some with leverage of 5x or more) were forced to liquidate due to insufficient margin, creating a negative feedback loop of "selling pressure - price decline - more liquidations."  During periods of illiquidity, volatility was amplified 10-15 times.

2. The interconnected collapse of international silver prices:

London spot silver plummeted from $83.94 to $75.11 within one hour (a drop of over 5%), with COMEX silver also experiencing a sharp decline. Domestic prices quickly adjusted in line with international prices, and the narrowing price difference triggered selling by arbitrageurs.

3. Exchanges were tightening their risk control measures:

CME Group raised margin requirements for metals, and the Shanghai Futures Exchange had previously increased margin requirements and price limits for silver, increasing holding costs and prompting funds to reduce positions and exit the market, further suppressing buying pressure.

4. Reversal of macroeconomic trends and risk aversion sentiment:

Rumors of progress in the Russia-Ukraine peace talks had led to a decline in safe-haven demand, and coupled with a short-term rebound in the U.S. dollar index, the financial attributes of silver were under pressure, causing capital to flow rapidly out of precious metals.

5. Limited support from inventory and warehouse receipts:

Although inventory levels were low, the support that high levels of warehouse receipts normally provide to prices was being overshadowed by panic sentiment, with buying interest only appearing around 17,500 RMB/kilogram.

6. Sector sentiment and capital outflows created a cascading effect:

In the earlier period, silver, platinum, and palladium all experienced extreme price increases due to the influx of speculative funds and expectations of interest rate cuts. However, on the afternoon of December 29th, the precious metals sector experienced a sharp decline from its highs, triggering a "long squeeze." Programmed stop-loss orders and forced liquidations quickly spread throughout the entire precious metals sector, leading to a collective sell-off.

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.