Last Updated on February 2, 2026 by Deon
The Dust Settles: A Market That Can’t Seem to Find Direction
After a weekend of digesting the most violent sell-off in decades, the precious metals market crouches nervously on high alert. After some minor stabilization on Monday, as futures on Gold moved back up to $4,775—the market continues to be “parabolic” January mood has been flattened into more cautious, data-dependent “wait-and-see.
The depth of Friday’s double-digit drop surpassed the most bearish predictions, analysts at ING said. This is why the path forward for Gold and Silver is going to increasingly difficult.
The ‘Higher-for-Longer’ Reality Check
The appointment of Kevin Warsh as the head of Federal Reserve remains to weigh on bullion.
The Dollar Powers Ahead: The U.S. Dollar Index (DXY) added 0.20% today. The dollar has lost safe haven status to the yen, but it’s back in favor since Warsh is seen as a “policy hawk” that could emphasize the control of inflation over rate cuts.
The Opportunity Cost: Higher-for-longer interest-rates make zero-yield assets like Gold more expensive to hold, effectively preventing the “debasement trade” that saw it run to $5,600.
All Eyes on Chinese Dip-Buyers
The world is turning to Asia for a lifeline as the holiday approaches on Feb. 17.
Retail Resilience: In China, the “pullback” is a gift to some. Shoppers in Shenzhen and Shanghai have reportedly descended on bullion markets to purchase jewellery and bars.
The Margin Squeeze: Yet, institutional buying continues to be held back. On Monday, the CME Group formally hiked margin requirements (to 8% for gold and 15% for silver), which means that traders need a lot more cash just to maintain what they already have in the market.
A ‘Crowded’ Trade Unwinds
Strategists at Jefferies and JPMorgan have called the crash a “mechanical unwind” of an extremely crowded trade.
The Tech Spillover: Curiously, a dramatic plunge in US large-cap tech stocks last Thursday caused some funds to sell their gold and silver to cover losses elsewhere.
Liquidation Spiral: After the price broke below $5,000, machines took over and a “domino effect” spread alongside stock exchanges from Sydney to London.
The Verdict: The Trend Battered, But Not Dead
Although the short term perspective has been weighed down by volatility, institutional analysts such like Deutsche Bank are sticking to long term targets of $6,000 for Gold at end of this year. There has been no change in the two structural drivers (geopolitics and global debt), yet the market has “rediscovered gravity” — officially.
For now, the line in the sand is $4,400 to $4,500. If dip-buyers can’t support that kind of floor, the correction also could be deeper.
