Silver tumbled to a 5-week low on Thursday, on track for its biggest weekly slide since 1983, caught up in a broader commodities sell-off and gold fell to its lowest in more than a week.
Spot silver fell more than 5% to USD 37.32 an ounce, down about 20% so far this week. It was bid at USD 37.70 an ounce at 1310 GMT from USD 39.34 on Wednesday.
Silver selling pressure was reinforced, after another rise in margin requirements for US silver futures, while global holdings of silver in exchange-traded funds staged their biggest one-day decline this year.
"Was silver a bubble? I think to a large extent it was. It's notoriously volatile. The fundamentals of silver are simply not as good as gold's," said Stephen Briggs, analyst at BNP Paribas.
The Chicago Mercantile Exchange Group raised margin requirements for the 5,000-ounce COMEX silver futures , increasing the cost of trading the metal.
Investors also scrambled out of physical silver, as reflected by the 15.3-million-ounce fall on Thursday in holdings of metal in global ETFs, with the world's largest -- the iShares Silver Trust staging the second-biggest one-day fall since its inception in 2006.
iShares holdings peaked at 11,390.6 tonnes on April 25, the same day that COMEX silver futures hit a 31-year high.
"Everyone is taking the view that commodities will have some sort of big shake-up and you'd be foolish to think otherwise," said ANZ head of metal sales Peter Hillyard.
Seatbelt-required
A flurry of investor liquidation prompted gold to pare earlier gains and slide more than 1% to USD 1,495.70 a troy ounce, its lowest since April 26.
Spot gold was bid at USD 1,504.75 an ounce, having retreated from a session high of USD 1,521.69, and compared with USD 1,515.65 late in New York on Wednesday. COMEX gold futures were last down 0.6% at USD 1,505.6.
"Silver looks set for another frenzied, seatbelt-required trading day," said UBS analyst Edel Tully in a note.
"The gold:silver ratio has extended higher, to 39 ... while silver is on this dangerous jaunt to the downside - which also includes impressive short-term rebounds - gold will not be immune, although our preference certainly rests with gold."
A stronger dollar against the euro after the European Central did not signal an imminent interest rate hike weighed on precious metals. But overall the generally weaker dollar is expected to help support commodities priced in dollars.
Platinum was down USD 1,797.99 an ounce from USD 1,817.25 on Wednesday and palladium at USD 728.72 from USD 743.50.
