Silver prices recorded mixed movements on Wednesday, posting a slight increase in local markets while coming under strong corrective pressure globally, according to a report issued by the Safe Haven Center. The developments come amid the continued impact of higher margin requirements at the Chicago Mercantile Exchange (CME) during a period marked by low liquidity.
The report noted that the price of silver per gram stood at around EGP 102 for 800 fineness, EGP 118 for 925 fineness, and about EGP 127 for 999 fineness, while the silver pound stabilized at EGP 944.
Globally, silver fell from $76.31 per ounce to around $72, as part of a corrective wave that followed an exceptional rally.
The center pointed out that silver posted sharp gains of approximately 148% during 2025, driven by strong fundamental factors. However, this historic surge was followed by a violent correction after margin increases at the CME forced traders to liquidate positions.
Silver recorded its largest daily drop since September 2020, falling 11%, just hours after reaching a record high of $84.01 per ounce, as profit-taking accelerated after both gold and silver entered clearly overbought territory toward year-end.
Margin Hikes Trigger a Sell-Off
The immediate catalyst behind the sell-off was a decision by the CME Group to raise margin requirements on silver futures contracts effective December 29. Initial margins for March 2026 contracts were increased to $25,000 per contract, pushing a wide segment of liquidity-constrained traders into forced exits or automatic liquidation.
Higher margin requirements oblige traders to inject additional cash to maintain open positions; failure to do so results in forced closures, generating direct selling pressure on prices.
The CME justified the move as an effort to align margins with elevated volatility levels, while critics argue it was an attempt to rein in a market characterized by excessive speculation.
In this context, Michael Haigh, Head of Commodities Research at Société Générale, downplayed the concerns, noting that year-end trading typically suffers from extremely weak liquidity, making even routine orders capable of triggering outsized price moves.
Chinese Demand Creates a Historic Premium
The correction came at a time when investment demand in China had peaked, with spot silver premiums in Shanghai surging to more than $8 per ounce above London prices on December 24—the widest gap ever recorded—as investors rushed into physical metal amid tightening supply.
The Shanghai Gold Exchange closed that day at $78.49 per ounce, about $7 higher than COMEX futures.
Estimates suggest speculative conditions had reached exaggerated levels, fueled by growing concerns over spot supply shortages. This coincided with Chinese plans to impose export restrictions starting January 1, while China accounts for roughly 60%–70% of global refined silver supply.
Société Générale estimates that such restrictions could reduce exports by around 30%, exacerbating the current global deficit estimated at 200–230 million ounces.
The report also warned that any potential regulatory measures in the United States—particularly if silver were classified as strategically important to national security—could further intensify supply shortages, at a time when physical silver is trading at premiums of 10%–15% in several major markets.
Strong Industrial Demand and Technical Signals for a Correction
China consumes more than half of global industrial silver output, particularly in solar energy, electric vehicles, and electronics. Electric vehicles require significantly larger quantities of silver than conventional cars, especially in power systems and charging infrastructure.
This structural demand, coupled with drawdowns from Chinese inventories, has led to backwardation in some contracts—a rare signal of immediate supply tightness.
From a technical perspective, the report said the correction was expected, as silver’s Relative Strength Index (RSI) remained above 70 for an extended period, signaling clear overbought conditions. Gold showed a similar setup prior to its sharp pullback earlier in the week.
Silver had risen more than 25% since mid-December, climbing from the $60 range to a temporary peak near $84 per ounce—a rapid ascent typically followed by a sharp correction as early investors lock in profits.
The report concluded by noting that 2025 was an exceptional year for both gold and silver, supported by rising geopolitical tensions, their role as inflation hedges, a weaker U.S. dollar, and expectations of interest rate cuts.
It also highlighted a warning from Elon Musk, CEO of Tesla, regarding potential Chinese restrictions on silver exports, stressing that such measures could have broad negative implications given silver’s critical role in electronics, solar energy, electric vehicles, and data centers.
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