Last night, the market stirred up quite a storm. Silver hit its largest single-day decline since 2021, dropping 8.7% overnight and approaching $70; gold was not spared either, breaking through two key levels at 4500 and 4400 consecutively, with the annual gain nearly halved. This is indeed a harsh turn for silver, which has gained nearly 200% this year.

But the real issue is not technical, but the market’s perception of rate cut expectations being completely divided.

On one side, political pressure is mounting. Trump stated he would not support a Fed chair candidate who opposes rate cuts, while popular candidates like Haskett and Waugh are calling for accelerated rate cuts, leading the market to expect an aggressive rate cut cycle might begin in the second half of next year. On the other side, the chairman of a US bank bluntly said that once the Fed’s independence is compromised, everyone will pay the price; HSBC even poured cold water on the situation, saying that if inflation does not significantly decline, there may be no rate cuts before 2026.

The fuse was quickly lit. The CME suddenly increased margin requirements for gold and silver futures, forcing a large amount of speculative positions to be liquidated, which triggered a liquidity squeeze. This is not just an issue for precious metals; for crypto assets that track macro liquidity, such volatility is equally concerning.

The rate cut game has already entered a heated phase, and the confrontation between political rhetoric and financial independence will only intensify. The high volatility of precious metals may just be the beginning. What do you think of this round of adjustment? Are you planning to buy the dip or continue to watch?