Gold and silver prices fell sharply on Thursday, unwinding much of a short-lived rally as investors locked in profits amid persistent volatility, a firmer U.S. dollar, and a cooling of geopolitical tensions that had briefly revived demand for safe-haven assets.
Spot gold slid 2% to $4,864.36 per ounce by 0920 GMT, after falling more than 3% earlier in the session. U.S. gold futures for April delivery were down 1.3% at $4,855.80. Silver bore the brunt of the sell-off, tumbling 11.3% to $78.13 an ounce after plunging nearly 17% at one point, underscoring the fragile sentiment gripping precious metals markets.
The sharp moves come after a period of extreme price swings. Both gold and silver suffered their steepest single-day losses in decades last Friday, only days after hitting record highs, as speculative positioning built up rapidly and then reversed just as quickly.
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“This is an after-effect of the volatility we’ve seen since last Friday,” said Carsten Menke, an analyst at Julius Baer. “The market has not found an equilibrium yet, which is why we see another sell-off following the previous two days’ recovery.”
Menke said short-term volatility is likely to persist as investors struggle to recalibrate expectations around interest rates, geopolitics, and physical demand.
Gold extended its recent losses earlier this week, sliding to as low as $4,403.24 on Monday, while silver dropped to $71.32, their weakest levels in about a month. That decline followed news that Kevin Warsh, a former Federal Reserve governor, had been nominated to lead the U.S. central bank. The nomination was seen by markets as reducing the risk of a sharply dovish Fed, supporting the dollar, and pressuring non-yielding assets such as gold.
The subsequent rebound in precious metals on Tuesday and Wednesday was driven largely by renewed concerns over U.S.-Iran tensions, which briefly reignited safe-haven buying. However, as fears of an immediate escalation faded and broader risk sentiment stabilized, those gains proved difficult to sustain.
Ole Hansen, head of commodity strategy at Saxo Bank, pointed to technical and regional factors amplifying Thursday’s sell-off, particularly in silver.
“Heavy selling emerged in the Chinese futures market and on the CME after failing to break resistance at $90.50,” he said.
Hansen added that weaker demand from China ahead of the Lunar New Year, combined with reports of a sizeable short position held by a Chinese investor, weighed heavily on sentiment.
The broader macro backdrop also turned less supportive. The U.S. dollar climbed to a two-week high, making dollar-priced commodities more expensive for holders of other currencies. Global equities slipped, while a broad range of commodities, including crude oil and copper, also moved lower as investors reassessed geopolitical risks and demand prospects.
Other precious metals were not spared. Spot platinum fell 6.5% to $2,082.76 per ounce, retreating further from its all-time high of $2,918.80 reached on January 26. Palladium dropped 3.5% to $1,711.69, extending recent losses.
Market participants say the violent swings highlight how crowded positioning and speculative flows have come to dominate short-term price action in precious metals. With inflation expectations, central bank policy signals, and geopolitical developments all pulling prices in different directions, traders are bracing for continued turbulence before a clearer trend emerges.