China’s Lone Silver Fund Plunges 10%, Halting Frenetic Rally as Wall Street Tests Key Levels

The value of China’s only pure-silver fund plummeted by its 10% daily limit in recent trading, ending a frenetic rally that had prompted its manager to issue a rare series of warnings.

The abrupt fall in the UBS SDIC Silver Futures Fund (LOF) follows weeks of gains that the fund manager described as “insustainable,” fueled by surging global interest in precious metals.

Spot silver hit a record high of $72.70 an ounce on December 24 and is on track for its best annual performance since 1979. The global price surge gained momentum after a historic short squeeze in October.

After the fund hit its 10% upward limit for three consecutive days this week, UBS SDIC Fund Management tightened rules on Wednesday night. New subscriptions for Class C shares will be capped at 100 yuan ($14.25) starting December 26, down from 500 yuan, the manager said in a statement. Gold, platinum, and palladium have also soared, triggering similar gains and investor warnings for other Chinese funds.

The volatility in commodities comes as equity markets see a quieter session. With European indices like the Ibex 35 and EuroStoxx 50 closed for a holiday, investor attention is shifting to Wall Street, though trading volumes are expected to be light.

US futures point to a slightly higher open for the S&P 500 and Nasdaq 100, holding near current levels. Global stocks have advanced 20.6% since the start of 2025 and are looking at a potential 14% upside next year, according to a Bloomberg market consensus. Analysts see further room for Wall Street to run, citing expectations for rising corporate profits and a more accommodative monetary policy from the Federal Reserve.

From a technical standpoint, the market is at a critical juncture. According to analyst Joan Cabrero, the spring rally remains intact as long as the S&P 500 stays above its 23.6% Fibonacci retracement level of 6,430 points.

“Only if this technically relevant support is breached could we start talking about a clearly corrective process and not just a consolidative one,” Cabrero said. The Nasdaq 100 has already bounced precisely off its 23.6% Fibonacci level at 23,900 points, while the S&P 500 holds a support range between 6,555 and the critical 6,430 mark.

As long as these levels hold, recent price action is seen as a logical and healthy digestion of the prior rally, compatible with an eventual continuation of the uptrend.

“If that digestion ends badly and the supports give way, the script would change completely,” Cabrero warned. “A loss of 6,430 in the S&P 500 and 23,900 in the Nasdaq 100 would signal the end of the spring rally and open the door to a full-blown correction.” He added that with supports so well-defined, “the most sensible thing is not to reduce stock exposure as long as they are not lost.”

In currency markets, the euro is positioned as a key reference for 2025 and is expected to continue gaining ground against other major currencies, driven by shifting interest rate differentials. Technical analysis points to an initial target of $1.235.

The euro-dollar pair is reacting higher after testing the base of its recent upward channel around the $1.1480 level, according to Cabrero. The pair has already surpassed its 2023 and 2024 highs of $1.1225-$1.1275, confirming a medium-term uptrend. This places initial targets at $1.22-$1.235, followed by $1.25.