Gold Rebounds After Sharp Selloff

Last Updated on February 3, 2026 by Deon

What Triggered the Selloff

Its recent slide was set off by news that former Federal Reserve official Kevin Warsh had been nominated by President Trump to lead the next Fed. Markets saw the announcement as more hawkish than they had anticipated, driving the US dollar higher and inducing broad profit-taking across gold and silver.

Analysts: Correction Was About Positioning

Market watchers say the pullback had little to do with peace breaking out, either on the geopolitical or macroeconomic front. Rather, it was representative of indigestion after January’s powerful rally prompted positioning to become overly stretched.

“Prices have been trading well above those levels historically associated with safe-haven demand,” analysts at Sucden Financial said. “The correction seems like more of a clearing of excessive positioning than an actual change in uncertainty.”

Silver Outperforms in Volatile Rebound

Silver led the rebound, spiking almost 13% to $87.07 an ounce with volatility remaining high across the metals complex. The sharp action was a stark indicator of how crowded trades had gotten in the wake of silver’s historic move higher.

Outlook: Volatility Likely to Persist

Although prices have been yanked about, the rebound points to persistent demand for precious metals. But investors are preparing for continued volatility as traders position themselves around changing sentiment over US monetary policy, the dollar and central bank leadership.