Silver (XAG) Forecast: London Supply Surge Sparks Selloff as Bulls Head for Exit Door

Silver Slides on Profit-Taking and Easing London Squeeze After Record High

At 12:01 GMT, Silver is trading $50.06, down $2.31 or -4.42%.

The decline tracks a similar pullback in gold, which dropped 2% after reaching new record highs on safe-haven demand and expectations of U.S. rate cuts. The stronger U.S. dollar, up 0.3% on the day, added to the selling pressure by making precious metals more expensive for non-dollar buyers.

London Liquidity Constraints Ease, Pressuring Prices Further

One of the key drivers behind silver’s recent surge had been a liquidity squeeze in London, where physical supply had grown tight and borrowing rates soared to record highs. However, a significant wave of metal shipments—estimated at over 1,000 tons—arrived from the U.S. and China over the past week. According to traders, between 15 and 20 million troy ounces of silver were flown into London, an unusual move typically reserved for gold due to cost.

This influx has alleviated tightness in the world’s largest over-the-counter precious metals hub, easing both the spot price premium and short-term borrowing rates. Morgan Stanley estimates most silver in London vaults remains tied to ETFs, but the short-term squeeze has clearly softened for now.

China and India Now Compete for Supply

While London has seen relief, physical tightness persists elsewhere. China shipped 100–150 tons of silver out of the country last week, though not all headed to the UK. India, the world’s top silver consumer, is actively competing for shipments due to festive season demand and a domestic shortage. Indian premiums have surged to historic levels, forcing increased reliance on air freight.

Meanwhile, Shanghai Futures Exchange stocks dropped by 249 tons to 920 tons last week—the largest weekly outflow in 11 years. In the U.S., 697 tons have exited Comex warehouses since early October, pressured by tariff-related uncertainty.

Short-Term Outlook: Bearish Bias Prevails

With technical support levels breached, profit-taking accelerating, and a significant easing of the London squeeze, silver is facing renewed downside pressure in the short term.

While long-term fundamentals remain strong, short-term sentiment has turned bearish.

All eyes now turn to Friday’s U.S. CPI data and the Federal Reserve meeting next week. A rate cut could help stabilize prices, but until then, further retracement toward the $47–$44 zone cannot be ruled out.

More Information in our Economic Calendar.