The selloff accelerated after CME Group on Thursday raised margin requirements for gold and silver futures for the third time in two weeks, forcing leveraged traders to unwind their positions. The move, aimed at curbing risks from increased market volatility, compounded pressure from the Federal Reserve’s hawkish expectations following the appointment of Kevin Warsh and a stronger dollar.“Last week’s steep decline was driven by aggressive Fed expectations following Kevin Warsh’s nomination, a stronger dollar and sharp increases in CME margins that forced deleveraging,” said Hareesh V, Head of Commodity Research at Geojit Investments Limited. “Profit taking after record highs also amplified the rapid swings, leaving market sentiment vulnerable.”
Time to buy silver?
Despite the brutal correction, fund managers see potential for long-term investors willing to take a systematic approach.
“Yes, at current levels, investors can consider taking exposure to silver ETFs with a long-term perspective and through a systematic approach,” said Satish Dondapati, fund manager at Kotak Mahindra AMC. “While prices have corrected, silver’s near-term volatility is likely to persist. Over the long term, silver’s fundamentals remain intact, supported by tight supply and strong industrial and investment demand.”
However, Dondapati cautioned that position size is critical: “Investors should keep in mind that silver is a highly volatile asset and should invest based on their risk appetite, limiting the total allocation to precious metals to around 15-20%. Aggressive investors can take on higher exposure within this range, while conservative investors should maintain a lower exposure.” Silver’s thin market structure has magnified the decline. “Silver is on the rise mainly because it has increased in value too quickly in a short period of time,” said Akshat Garg, head of Research & Product at Choice Wealth. “Over the past year, prices had risen sharply and a lot of bullish positioning was already built in. When markets are stretched like this, even small changes in global signals can trigger a correction.”
He added: “Silver naturally reacts more sharply than gold. It’s a smaller and thinner market, so when the selling starts, the decline looks steeper. Silver ETFs feel the impact immediately because they closely monitor spot prices.”
Despite the brutal correction, technical indicators point to a possible stabilization. Silver is now trading within the $71-$80 demand zone, with a hammer formation near $64 aligned with the long-term 100-day exponential moving average, reinforcing structural support after correcting from highs above $120.
SIP or lump sum?
Asset managers recommend a disciplined approach over knee-jerk reactions.
“There is no need to panic. Silver is a volatile asset and sharp ups and downs are part of the journey,” said Garg. “One correction doesn’t change silver’s long-term relevance, but it does remind investors why position size matters.”
He warned against lump sum investing at current levels: “Investors should avoid chasing prices or reacting to daily movements. Silver works best as a small, supportive allocation in a portfolio, not as a core investment. If someone wants exposure, buying in installments is a much wiser approach than investing in lump sums, especially in a volatile phase like this.”
Hareesh reiterated the gradual approach: “Euro investors should remain patient and avoid reacting to short-term volatility caused by margin increases, profit-taking and policy uncertainty. Gradual, staggered accumulation can help manage timing risks as longer-term fundamentals such as geopolitical tensions, central bank demand and currency pressures remain supportive.”
He added that monitoring the dollar and upcoming Fed signals is critical while balancing positions to deal with increased volatility.
For short-term traders, rigorous risk management is essential. “For long-term investors, this phase is about patience and discipline rather than action,” Garg said. “The current decline is driven more by market positioning and global macro adjustments, rather than a failure of the silver story.”
Silver’s dual monetary and industrial roles continue to support a constructive long-term outlook. A decisive move above $80-$85 would significantly strengthen the recovery outlook towards $100-$105, suggesting that the recent carnage could provide opportunities for those who missed the initial rally, provided they have the courage for continued turbulence.
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