Most asset classes entered a rally as Donald Trump’s odds of victory began increasing after the polling stations closed on November 5. The rally turned into a massive upsurge once the Republican was declared a winner, and the elections ensured the U.S. stock market experienced its best day in two years.
Dollar indices and cryptocurrencies likewise rocketed in what proved a bonanza for most investors. Still, two prominent assets – gold and silver – were absent from the uptrend and crashed instead.
By November 7, however, the situation changed once more, and silver re-entered a rally – or, more likely, a correction – and is up 1.44% in the last 24 hours with a press time price of $31.61.
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Why did Silver price crash on Wednesday and surge on Thursday
Though the exact reason behind the November 6 plunge can only be speculated on – and is, indeed, probably the result of multiple factors – it has been linked to broad bullish expectations for the economy under Trump and the sudden strengthening of the dollar.
One additional metric, however, indicates that the Thursday rally might be, first and foremost, an upward correction. Specifically, silver’s trading volume effectively doubled on Wednesday compared to the figures one day earlier and one day later.
This, along with the stock and cryptocurrency market surges, hints that investors may have been selling safe-haven precious metals in favor of rocketing risk assets.
All things considered – and particularly once the volatility ahead of the November 7 Federal Open Market Committee (FOMC) decision is accounted for – the Thursday rally is likely equal parts ‘buy the dip’ action, a flight to safety ahead of the interest rates verdict, and market normalization after an intense Wednesday.
Such a reading is arguably further reinforced by the fact gold has followed an exceptionally similar price pattern – and witnessed a threefold volume increase on November 6.
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