Singapore

SILVER gained after the biggest loss since August, with markets calming following a buying frenzy that sent prices to an eight-year high.

Futures rose as much as 3.3 per cent on Wednesday following a turbulent two days that saw the market whipsawed as an investor stampede into the metal gave way to swift exits.

Silver's emergence as a focus of an online forum that trains its fire on supposedly shorted assets pushed prices above US$30 an ounce on Feb 1 before a 10 per cent tumble on Feb 2 as CME Group jacked up margin requirements.

Posts on Reddit's WallStreetBets forum had initially called for a "short squeeze" of silver, with prices pushing higher and options trading surging. But sentiment has now turned with users speculating that supporting posts may be part of a pump-and-dump scheme - or that hedge funds infiltrated the board.

The slump in silver on Feb 2 came alongside a plunge in shares of GameStop and AMC Entertainment Holdings, two other popular trades.

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Reddit traders "have very little financial firepower, and while it is a good story, the reality is that they simply do not have the capital to really push global markets like silver around," said Michael McCarthy, chief market strategist at CMC Markets.

"I suspect what happened was, some bigger players got involved and tried to ride the Reddit wave, and that would explain why we saw that spectacular gain for silver. Given the lack of firepower for the Reddit traders, silver is returning to where it all began," he said.

Futures were 1.9 per cent higher at US$26.91 an ounce by 5.56am in London, while spot prices added 0.6 per cent. BlackRock's iShares Silver Trust, a short-squeeze target, slumped more than 8 per cent on Feb 2.

The wild swings have come under scrutiny. Treasury Secretary Janet Yellen has summoned US regulators, including the Commodity Futures Trading Commission (CFTC), to discuss recent volatility, in her first public effort to address the tumult involving GameStop shares and broker-dealer Robinhood. The CFTC has previously said it is closely monitoring activity in silver.

Goldman Sachs said silver remains the bank's preferred precious metal, although it noted that the rally on Feb 1 was never going to be enough to squeeze shorts as those positions are backed by physical stock.

Even as the intensity of market moves eased, buying interest remains. The US Mint said it is still rationing sales of silver coins because of "exceptional market demand", as well as limited supplies and manufacturing capacity. BLOOMBERG