Silver has recently exhibited dramatic price fluctuations reminiscent of Bitcoin's notorious volatility. Over the weekend, the precious metal experienced sharp price movements, driven by expectations of interest rate cuts and changing industrial demand.
On Sunday, silver soared to a record high of nearly $84, driven by increasing demand in the booming precious metals market. Concurrently, the price of gold also hit new peaks, reaching approximately $4,530. This surge in precious metals comes as the cryptocurrency market struggles to find its footing.
According to The Kobeissi Letter, silver's volatility was particularly notable over the weekend. At 6:20 PM ET, just 20 minutes after futures trading commenced, silver prices skyrocketed by 6% to achieve a new all-time high of $83.75. However, by 7:30 PM ET, the price plummeted by 10%, falling to a low of $75.15 within just 70 minutes.
Although silver and gold are typically seen as more stable investments, silver has shown greater price volatility. The anticipation of a new U.S. Federal Reserve chair, aligned more closely with President Trump and expected to implement significant interest rate cuts, has contributed to these price movements. Lower interest rates generally reduce returns on bond investments, prompting investors to turn to commodities like gold and silver.
In addition to these financial dynamics, silver's industrial applications also drive its demand, as it is essential for manufacturing a variety of products. This demand forms part of the "debasement trade," which reflects declining long-term confidence in the U.S. dollar due to monetary inflation.
While silver and gold prices are buoyed by anticipated rate cuts, Bitcoin and the broader cryptocurrency market have remained relatively stable, with Bitcoin down 0.5% over the past month, sitting at $90,160 according to CoinGecko data. Bitcoin, which reached an all-time high of $120,000 in early October, now requires a 6.5% increase to end the year on a positive note.