Is Silver in Trouble? Expert Gives Context
New York, NY – Silver prices experienced a sharp correction on Thursday, January 22, 2026, retreating from the record highs established earlier in the week. After peaking near $95.87 per ounce on Tuesday, spot silver plunged approximately 3.6% to settle in the $91.17 – $93.45 range, leaving precious metals investors questioning whether the historic rally has run its course.
The dramatic decline came as geopolitical tensions unexpectedly eased and traders aggressively locked in profits following silver’s stunning 34% gain since the start of 2026. For investors who piled into the precious metal as a safe-haven play, today’s sell-off represents a significant reversal that has sparked debate about the sustainability of this year’s explosive rally.
UPDATE: Silver prices are already rising after the latest news from Davos regarding Ukraine and the U.S.A.
Five Key Factors Behind Thursday's Silver Sell-Off
The decline is primarily attributed to a sudden shift in global risk sentiment and technical profit-taking. Below is the detailed breakdown of why prices moved lower today:
1. Sudden De-escalation of "Greenland" Trade War Fears
The most significant catalyst for the drop was a surprise announcement from U.S. President Donald Trump regarding the ongoing dispute over Greenland and the Arctic region.
- Earlier this week, threats to impose a 10% tariff on eight European Union countries (set to begin February 1) sent silver and gold to all-time highs as investors fled to safe-haven assets
- Today, the administration announced a “framework deal” with NATO and EU partners, stating that the planned tariffs would no longer be imposed
- This immediately drained the “geopolitical risk premium” from the silver market, eliminating one of the primary drivers behind this week’s historic surge
2. Aggressive Profit-Taking After Vertical Rally
After silver’s historic rally—which saw it gain nearly 34% since the start of 2026—traders moved en masse to “book profits.”
- Market analysts noted that silver was in “overbought” territory following its parabolic ascent
- Once the $95 level was breached and then lost, it triggered automated sell orders and stop-losses, accelerating the downward move
- Many institutional desks viewed this as a healthy recalibration following a vertical price climb that had become unsustainable in the short term
3. Strength in the U.S. Dollar (DXY)
The U.S. Dollar Index (DXY) firmed up today as global trade tensions eased, creating persistent headwinds for precious metals.
- The dollar’s 0.1% to 0.3% rise made silver more expensive for international buyers, naturally dampening demand
- Because silver is priced in dollars, any strengthening of the greenback creates immediate pressure on precious metals prices
- Currency strength provided a technical headwind throughout the trading session
4. Massive Rotation into Equities (Risk-On)
The easing of tariff threats triggered a massive rally in the stock market, with capital flowing rapidly out of defensive assets.
- The Dow Jones rose over 700 points, and the S&P 500 saw significant gains
- As investors regained confidence in the global economy, capital flowed out of defensive assets like silver ETFs (such as SLV) and back into high-growth tech and industrial stocks
- The shift from “risk-off” to “risk-on” sentiment fundamentally undermined silver’s recent appeal as a safe haven
5. Fed Rate Expectations Remain Elevated
Investors were closely watching today’s release of the Personal Consumption Expenditures (PCE) inflation data and weekly jobless claims.
- The data largely matched expectations, suggesting the Federal Reserve would likely keep interest rates steady for the current quarter rather than cutting them immediately
- Since silver yields no interest, the prospect of rates staying “higher for longer” reduces its appeal compared to interest-bearing accounts
- The absence of near-term rate cuts removes a key supportive factor for non-yielding precious metals
The Numbers: Silver's Dramatic Week
Tuesday Peak: $95.87 per ounce (all-time high)
Thursday Close: $91.17 – $93.45 range
Single-Day Drop: -3.6%
Year-to-Date Gain: Still up ~34% (despite correction)
What This Means for Precious Metals Investors
While today’s drop was sharp, many commodity analysts remain bullish for the remainder of 2026. Several structural factors are still providing a “floor” for silver prices that suggest this correction may be temporary rather than the beginning of a sustained downturn.
Bullish Factors Still in Play:
- Supply Deficits: Global inventories at the LBMA and COMEX are at multi-year lows, creating fundamental tightness in the physical market
- China’s Export Controls: New licensing requirements on silver exports from China (effective January 1, 2026) continue to restrict global supply, potentially supporting prices over the medium term
- Industrial Demand: Massive demand from the AI chip sector and solar energy installations remains at record levels, providing structural support beyond silver’s traditional role as a monetary metal
Market analysts are characterizing today’s move as a “healthy correction” following an unsustainable vertical rally. However, for precious metals investors, the question remains whether geopolitical stability will continue to erode silver’s safe-haven premium or whether the underlying supply-demand fundamentals will reassert themselves.
Investors will be watching closely for any resumption of trade tensions, further developments in China’s export policy, and upcoming Federal Reserve commentary that could reignite the precious metals rally.
Silver Expert Joins the Discussion
References
- Silver spot price data – (COMEX, LBMA)
- U.S. Dollar Index (DXY) – (Federal Reserve)
- PCE inflation data – (Bureau of Economic Analysis)
