Looking to the Futures

Silver futures (/SI, currently set for March delivery) crashed from an intraday record high of $121.785 reached on Thursday to Monday morning’s low of $71.20, a drop of over 41%, before rebounding above $85 on Tuesday. The majority of the move came on Friday, when silver plunged over $44 peak-to trough. Multiple factors played a part in the selloff.

On the monetary policy front, President Trump’s announcement of Kevin Warsh as his pick for the next Fed chair spurred a sharp rally in the dollar. The dollar index ($DXY) rallied from 96.02 Thursday to 97.15 on Friday. The presumptive nominee previously served on the Federal Reserve Board as the youngest governor in history, serving from 2006 through 2011. During the 2008 financial crisis he was among the most hawkish members of the Fed, describing his concerns about inflation while unemployment was rising. More recently, he has expressed support for short-term rate cuts, but to a lesser degree than some of Trump’s other finalists. He has also favored reducing the Fed’s balance sheet, which could raise longer-term interest rates and provide more support for the dollar.

Elsewhere in Washington, the government shutdown that began over the weekend came to an end yesterday. The deal provided funding for the Treasury Department and Department of State among others, along with a short-term funding deal for the Department of Homeland Security. It allows more time to negotiate on immigration enforcement but that may require some cooperation across the party aisle to pass. The end of the shutdown could lead to a more risk-on approach for investors, away from precious metals.

Another source of safe-haven demand may come off the books as tensions between the U.S. and Iran ease. On Monday, news agencies announced that high-level talks between Iran’s top diplomat and U.S. Special Representative Steve Witkoff are expected on Friday in Istanbul. The news follows events that have escalated tensions, including protests in Iran that were met with deadly crackdowns by internal security forces. Following the crackdown, the USS Abraham Lincoln carrier group moved into the Indian Ocean, getting into position for possible strikes on Iranian targets.

Finally, a new market mechanic is in play in metals futures. In January, the CME Group changed the calculation for futures margin requirements for a range of products, including silver. Rather than providing a set value for these products, the CME has started updating requirements daily based on a percentage of the nominal contract value based on the previous day’s settlement. The change largely resulted in higher margin requirements as the price gains led to margin requirements increasing daily. The exchange is also increasing the requirement in percentage terms. At the end of 2024, under the static margin regime in place at the time, silver performance bond requirements equaled about 7.9% of the nominal value. At the end of 2025, the requirement equaled approximately 9.2% of the nominal value. This week, the CME increased the requirement from 11% to 15%. The increased requirements mean that a decline could cause a self-reinforcing cascade of selling, as longs experience margin calls.

Despite the recent volatility, silver is still far above its long-term average. At Tuesday’s settlement price of $83.30, it has only traded above that price in the last three weeks. In more relative terms, it is also trading at a greater fraction of the price of gold. The price ratio of gold to silver is currently around 56, compared to its long-term average over 80.

Despite the recent moves, the contract is still above the 50-day SMA and within range of the 9- and 20-day SMAs. The reversal led to a dramatic decrease to the MACD. The RSI is around the neutral level of 50 after spending much of the past six months at overbought levels.

Major economic reports, trading events, and news items that could potentially impact specific futures markets:

S&P Global US Manufacturing PMI™ Finalfor January (interest rate and stock index futures)

ISM Manufacturing PMI for January (interest rates and stock indices)

Construction Spending for December (interest rates)

U.S. Treasury Refunding Financing Estimates (interest rates)

20-Day SMA                    4,756.4

50-Day SMA                    4,479.6

200-Day SMA                  3,845.6

14-Day RSI                       48.80%

Implied Volatility              35.59%

ADP Employment Change 8:15 AM ET

EIA Crude Oil Inventories 10:30 AM ET

ISM Non-Manufacturing Index 10:00 AM ET

MBA Mortgage Applications Index 7:00 AM ET

S&P Global U.S. Services PMI - Final 9:45 AM ET

New futures products are available to trade with a futures-approved account on all thinkorswim platforms: 

• Ripple (/XRP)
• Micro Ripple (/MXP)
• Micro Corn (/MZC)
• Micro Wheat (/MZW)
• Micro Soybean (/MZS)
• Micro Soybean Oil Futures (/MZL)
• Micro Soybean Meal Futures (/MZM)
• 1 OZ Gold (/1OZ)
• Solana (/SOL)
• Micro Solana (/MSL)

Visit the Schwab.com Futures Markets page to explore the wide variety of futures contracts available for trading through Charles Schwab Futures and Forex LLC.