Gold and silver prices extended their decline on Friday as stronger-than-expected US economic data strengthened the dollar and diminished expectations for Federal Reserve interest rate cuts in the near term. The precious metals faced headwinds from improved economic indicators that reduced their safe-haven appeal.

Current Market Performance

Spot gold prices and futures showed mixed movements amid the changing economic landscape:

US Economic Data Impact

The US Labor Department released encouraging employment data that significantly influenced precious metals trading. Weekly initial jobless claims for state unemployment benefits dropped by 9,000 to a seasonally adjusted 198,000, substantially below economists' expectations of 215,000 claims polled by Reuters.

This positive employment data contributed to the dollar's strength, marking its third consecutive weekly gain. A firmer dollar makes greenback-priced metals more expensive for overseas buyers, reducing international demand. Additionally, gold as a non-yielding asset typically benefits from low interest rates because they reduce the opportunity cost of holding the precious metal.

Silver and Other Precious Metals Performance

Silver experienced more pronounced declines compared to gold, though it maintained strong weekly performance:

Individual investors have been purchasing silver at an unprecedented pace, making it the most crowded commodity trade in the market according to a Thursday report by Vanda Research. TD Securities closed a short silver position after prices hit their exit level at $93.15 per ounce, resulting in a theoretical loss of approximately $606,000.

Global Developments and Market Factors

Several international developments influenced precious metals markets. Gold's safe-haven appeal weakened as geopolitical tensions showed signs of easing. President Trump indicated that fatalities in Iran's protest crackdown were declining and expressed belief that authorities were not planning mass executions.

China's central bank announced sector-specific interest rate cuts on Thursday to provide early economic stimulus. Meanwhile, Poland's central bank expressed intentions to increase gold reserves to 700 tons, according to statements from the bank's governor.

Investment Fund Activity

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, reported its holdings increased by 0.05% to 1,074.80 tons on Thursday, indicating continued institutional interest despite short-term price pressures.

The precious metals market continues to balance between safe-haven demand and economic optimism, with upcoming industrial production data from the US scheduled to provide additional market direction.

Neo Wealth Management has issued a stark warning about silver's current market position, suggesting the precious metal could face a dramatic correction despite trading near record highs in 2025. The firm's comprehensive analysis outlines multiple scenarios where silver prices could plummet to as low as $30 per ounce, representing a potential 60% drawdown that could extend recovery timelines into the early 2030s.

Industrial Demand Driving Current Rally

Silver's recent surge has been primarily fueled by robust industrial applications across emerging sectors. According to Shantanu Bhargava, CEO of HNI Digital Advisory and Managed Solutions at Neo Wealth Management, the metal is "trading at record levels amid a multi-year supply deficit." The report reveals that industrial demand constituted 59% of total silver consumption in 2024, with significant contributions from solar panel manufacturing, electric vehicle production, and AI data center infrastructure.

Historical Precedents Signal Vulnerability

Neo Wealth Management's analysis emphasizes that silver's most severe corrections have historically stemmed from investment outflows and liquidity shocks rather than fundamental weakness. The report cites two critical precedents that demonstrate the metal's vulnerability to rapid reversals.

Applying these historical patterns to current price levels, the firm projects that a 2008-style liquidity crisis could drive silver down to approximately $30 per ounce, while a 2011-style correction might see prices settle around $40 per ounce.

Market Structure Raises Red Flags

Current market conditions present several concerning indicators that suggest heightened vulnerability. COMEX silver futures open interest has reached 165,805 contracts, marking a 17.90% increase over the past year. More significantly, retail micro futures contracts have surged by 238%, indicating substantial leveraged speculative positioning that could unwind rapidly under market pressure.

The report also highlights silver's current backwardation status, where spot prices exceed futures prices, typically indicating short-term physical tightness. However, Neo Wealth cautions this condition may prove temporary, noting that "if only 10% of the amount held in silver-backed ETPs were liquidated, it could effectively erase the 2025 deficit and cause the backwardation to vanish instantly."

Downside Scenario Analysis

Neo Wealth Management presents a comprehensive stress-test scenario where global investment demand collapses entirely. Under such conditions, the current projected 120 million ounce supply deficit would flip into a 216 million ounce surplus. Using demand-elasticity modeling, the firm estimates a fundamental price floor of $61.00 per ounce in this scenario.

Mining Economics Provide Ultimate Floor

The analysis identifies $25.00-$30.00 per ounce as the ultimate price floor based on global mining economics. While the average All-In Sustaining Cost for primary silver miners was $13.00 per ounce in early 2025, this figure benefits from by-product credits from gold, copper, lead, and zinc production. In a severe downturn affecting these metals, by-product credits would diminish, raising true mining costs to approximately $22.00-$26.00 per ounce.

Investment Implications

Bhargava warns that "any investment initiated at the current price must take in a potential peak-to-trough drawdown of approximately 60%, with a recovery period that could extend into the early 2030s based on past bear market cycles." The firm notes that silver's high-beta characteristics mean it typically falls 2.50 times faster than gold during market stress periods. Additionally, potential U.S. dollar strength, which historically maintains negative correlation with silver, could further pressure prices, particularly affecting non-U.S. buyers.