The price of silver sank Wednesday from a 30-year high after investors were forced to put up more money to place bets on the metal using futures contracts.
But silver finished up from its lows of the day, as did gold, which fell from a record high before ending just slightly below $1,400 an ounce.
"It could have been a lot worse," said Larry Young, a commodities trader at Covenant Trading in Chicago.
A 4-day-old rally in the dollar, the archrival of the precious metals, also weighed on gold and silver, Young said.
Silver futures contracts for delivery next month slid $2.04, or 7.1%, to $26.86 an ounce on the Comex market in New York on Wednesday. The metal had finished regular Comex trading Tuesday at $28.90, up 72% year to date and its highest level in three decades.
Late Tuesday the exchange raised so-called margin requirements on silver futures, making it more expensive to trade or hold a contract. Margin minimums often are raised in times of wild volatility in a commodity's price.
The move sent silver plunging as low as $26.42 in electronic trading Tuesday evening. In Wednesday's regular session, December futures bounced after hitting $26.48.
Are the precious-metals bulls cowed for the moment, after spectacular rallies in the last two months that were powered in part by the dollar's slide?
With the heavy hit to silver, "I can see a lot of people sitting on the sidelines now," said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago.
But he said he still wouldn't "short" the metal, betting on sharply lower prices. With U.S. trading partners irritated by the Federal Reserve's new plan to flood the financial system with dollars, any new weakness in the buck could bring buyers running back to silver and gold, he said.
Gold bulls did a pretty convincing job holding their ground Wednesday. The yellow metal, which closed at a record high of $1,409.80 an ounce on Tuesday in regular trading, sank as low as $1,382 in electronic trading that afternoon.
On Wednesday gold fell as low as about $1,384 in the regular session but recovered to close off $10.70, or 0.8%, at $1,399.10.
At a minimum, the sell-off in silver that began late Tuesday probably portends a lot more volatility in the metals in the short term, Young warned.
"This is a trader's paradise," he said.
Other commodity prices, many of which also have been rocketing in recent months, were mostly lower Wednesday. The Reuters/Jefferies CRB index of 19 major commodities fell 0.6%, ending a nine-session winning streak.