Silver burns itself out as stocks retreat ahead of year end

The final trading week of 2025 has begun, and so far, there’s not a Santa rally in sight. European stock futures are slightly higher as investors turn their backs on tech stocks, and US futures are lower as the Magnificent 7 get hit as we move to the end of the year. Silver is falling sharply as precious metals pull back from  record highs.

Silver price gets hit by wave of selling pressure

The silver price is down more than 5% on Monday after surging to a fresh record high above $84 an ounce earlier this morning. Copper also reached a fresh record as the market for metals remains hot into year end. However, what goes up must come down, and the pullback in silver has been rapid, as investors book profits before year end, after the silver price has surged more than 150% in 2025.

Supply pressures take a back seat for now

The sell off in silver was exacerbated by a flurry of activity on X, which included an Elon Musk post about China’s latest silver export restrictions being bad news for the global economy because silver is needed for industrial processes. While this is undoubtedly true, the speculative interest in silver, which has seen it rise by an astonishing 28% in the past month, is also a driver of silver’s volatility as we near year end.

What goes up, must come down

Silver has rallied by 157% so far this year, it is by far the best performer in the commodity and equity index space in 2025. However, today’s sharp retreat suggests that we have put in a medium term high for the metal, and traders should brace themselves for a period of volatility as we move into 2026. While there is still a supply and demand imbalance in the precious metals sphere, it continues to hold that what goes up, and then up farther still, must come down.

For now, technicals are driving precious metals and they are suggesting that gold and silver are overbought. The gold price is also lower today, but it is down by 1.8%, with the silver price taking the brunt of the selling pressure.

$70 now a key support level for silver

There is undoubtedly a bubble in silver, but it remains to be seen how long the downside can last. Some are expecting weeks of volatility, as precious metal exchanges increase margin calls, which could lead to forced selling. However, China is stockpiling silver, so that could limit any downside. The silver price has risen far above its moving averages, the 50-day sma is at $55 per ounce. It would take a catastrophic fall for the price to go back to this level, so instead $70 is now key support. If it breaches this level then it could cause pain for hedge funds and others who have large, long silver positions, and may lead to some fallout in other markets. We are not there yet, but we will be watching the price of silver closely in the coming days.

Risk off tone dominates final days of 2025

The sell off in silver is leading to a general risk off tone elsewhere. Tech stocks in the US are also lower, and the Vix could spike higher, although volatility remains low, and is well below its 12-month average at 14. Nvidia is down 1.6% in the pre-market, Tesla is lower by 1.5% and Google is down more than 0.5%.

Overall, the Magnificent 7 has had a decent December. In the past month, half of the Mag 7 have outperformed the S&P 500, led by Nvidia, Meta and Amazon. In contrast, the weakest performer is Google, who has gone from hero to zero, after a staggering 80% price rally over the past 6 months.

Enthusiasm for tech builds ahead of 2026

Investors may be paring risk as we move into the new year, but there are still some who are positive on the outlook for the world’s biggest tech firms. Morgan Stanley has picked Nvidia as one of its main stocks to watch in 2026, as it continues to innovate with new chips, solidifying its place in the AI hardware market, and diversifies its client base.

Is Nvidia’s customer base finally broadening out?

Nvidia’s client base has been a cause of contention in recent years, due to its concentration. Microsoft remains its biggest customer, generating over 18% of revenue for Nvidia. It’s followed by Meta, Super Micro, Amazon and Alphabet. Interestingly, Google and Wiwynn massively increased their spend with Nvidia in the last quarter, while Microsoft, Meta and Super Micro have cut back their spending. This suggests a change of the guard at Nvidia and may be a sign of a broadening customer base.

There is a defensive air to markets as we move towards year end, with energy stocks being the main beneficiary as the rally in precious metals burns out. The dollar is attracting some safe haven flows and is one of the top performers in the G10 FX space today.

Chart 1: The Silver price

Source: XTB and Bloomberg