Spot silver staged a significant recovery on Friday, climbing 8.6% to settle at $77.33 per ounce. This rally followed a steep intraday decline that saw prices briefly dip under the $65 threshold during Asian trading hours. Despite the rebound, the precious metal concluded the week with a substantial loss of more than 8.7%.
Exchange Actions to Curb Volatility
The CME Group announced an increase in margin requirements for its benchmark COMEX 5,000-ounce silver futures contracts. Both initial and maintenance margins were raised to 18% from 15%, effective after Friday's market close. This move is designed to mitigate risk following a period of intense price swings, as higher margin requirements increase the collateral needed for leveraged positions and can prompt quicker liquidations during market stress.
In a related development, the exchange is preparing to introduce a new, smaller 100-ounce silver futures contract on February 9, pending regulatory approval. This product is aimed at providing greater accessibility for retail traders, a demographic showing increased interest in the silver market.
Market Sentiment and External Pressures
Analysts attributed Friday's rebound to a combination of bargain hunting and a softer U.S. dollar, alongside speculative activity. The recent trading has been characterized by extreme volatility, with silver hitting a record high of $121.6 on January 29 before a sharp correction driven by technical selling. The iShares Silver Trust (SLV), the largest silver-backed exchange-traded fund, reflected the recovery, rising 5.3% to $70.19.
Attention now turns to upcoming U.S. economic indicators. The Bureau of Labor Statistics will release the Employment Situation report on Wednesday, February 11, followed by the Consumer Price Index on Friday, February 13. These data points are critical for shaping expectations around interest rates and the dollar, which are key drivers for non-yielding assets like precious metals.
The market faces a delicate balance. While higher margins may stabilize trading, they also risk accelerating sell-offs if prices fall and traders face cash calls. Silver's recent correlation with risk assets means it remains vulnerable to spikes in the dollar or Treasury yields.
