Editor’s Note
The recent extreme volatility in precious metals, particularly gold and silver, has created significant turbulence across related financial markets. This article examines the dramatic price swings and their spillover effects on equities and futures.
The recent epic volatility in metal prices, most notably in gold and silver, has had significant repercussions.
Data shows that the spot price of London silver plummeted by about 40% from its high in just a few trading sessions, followed by a violent rebound, before plunging again today. Gold, platinum, and palladium prices have experienced similar swings. Furthermore, the severe volatility in precious metals has spilled over into the base metals market, with metals like copper, aluminum, and tin also experiencing intensified “yo-yo” movements recently.
This extreme price volatility has directly shocked some futures market investors, with some exclaiming they are “witnessing history.” Additionally, Securities Times reporters found that the sharp price swings have impacted the willingness of some metal futures investors to hold positions.
Taking Shanghai gold futures as an example, data shows that before this round of gold price decline, the total open interest of Shanghai gold futures contracts was generally on an upward trend. However, on January 30, when all Shanghai gold futures contracts began to plummet, the total open interest dropped sharply by over 30,000 lots. This Monday, as Shanghai gold futures plunged again, the total open interest decreased by another approximately 14,800 lots. From January 30 to the present, the total open interest of Shanghai gold futures has cumulatively decreased by over 47,000 lots. The change in total open interest for Shanghai silver futures is also very pronounced: after a single-day reduction of about 34,000 lots on January 30, it decreased by approximately 8,800 lots and 65,000 lots on February 2 and February 3, respectively. From January 30 to now, the total open interest of Shanghai silver futures has cumulatively decreased by over 100,000 lots.
Beyond gold and silver, the total open interest for metal futures such as platinum, palladium, copper, aluminum, and tin in the domestic futures market has also declined along with the price fluctuations of these related products.
In the A-share market, as metal prices fluctuated, the margin financing behind some metal-related stocks that are margin trading targets also experienced “roller coaster” changes, resonating in sync with the metal price volatility.
Taking Hunan Silver as an example, as silver prices accelerated their rise, the margin financing balance behind Hunan Silver also grew rapidly. Starting from January 20, it surged from about 1 billion yuan to approximately 1.4 billion yuan in just a few trading days, a cumulative increase of about 400 million yuan. However, following the subsequent “precipitous fall” in silver prices, Hunan Silver’s margin financing balance also dropped sharply, returning to just over 1 billion yuan by February 3, essentially “reverting to its original state.”
Hengbang Shares’ margin financing balance experienced similar volatility. Data shows that since 2026, Hengbang Shares’ margin financing balance steadily climbed from around 1.4 billion yuan at the beginning of the year to just over 2 billion yuan on January 29, with daily increases mostly in the tens of millions. However, as domestic gold prices began a sharp correction on January 30, the margin financing balance that day also plummeted by over 100 million yuan, and further decreased by over 100 million yuan on February 2.
In addition, the margin financing balances behind gold stocks like Shandong Gold and China Gold, as well as several non-ferrous metal stocks like Chihong Zinc & Germanium and Zhongjin Lingnan, showed similar change curves, albeit with slightly milder amplitudes. Furthermore, as metal prices showed some recovery in recent trading sessions, the margin financing balances behind related stocks also saw a temporary rebound.
The ripple effects of the violent volatility in metal prices like gold and silver have also spread to the fund market, causing rare and severe fluctuations in the scale of some commodity funds. Among these, the scale changes of multiple gold ETFs are particularly notable.
According to Wind data, during the two trading days from January 30 to February 2, 2026 (last Friday to this Monday), when metal price volatility was especially intense, the combined scale of 14 commodity gold ETFs in the domestic market shrank by over 60 billion yuan.
Taking the currently larger-scale Huaan Gold ETF as an example, its scale rapidly increased after first surpassing 100 billion yuan on January 14, 2026, reaching 135.5 billion yuan by January 29, 2026. However, as gold prices plummeted, its scale shrank by about 7.9 billion yuan on January 30 and further by about 16.5 billion yuan on February 2, accumulating a contraction of over 20 billion yuan in just two trading days. The scales of several other gold ETFs showed similar changes.
The dramatic scale changes in the aforementioned commodity funds are clearly due to the extreme volatility in metal prices. Additionally, the short-term sharp decline in metal prices also slammed the brakes on the consecutive growth trend of shares for some commodity funds. For instance, during the period from January 30 to February 3, Bosera Gold ETF shares shrank for three consecutive trading days, whereas before that, the ETF had seen over 10 consecutive trading days of share growth.
Currently, metal prices like gold and silver have clearly not fully stabilized. Just on February 5, multiple domestic metal futures fell sharply again, with the main Shanghai silver futures contract plunging over 10%, the main Guangzhou Futures Exchange platinum futures contract dropping nearly 8%, and the main Shanghai tin futures contract falling over 7%.
A recent research report by CITIC Futures analysts Zhu Shanying, Zhang Haoyun, and Wang Dan suggests that the contraction of US dollar credit is the core foundation of this bull market in precious metals, and the long-term narrative has not reversed. After 2023, gold’s movement decoupled from real interest rates, confirming that gold’s pricing anchor has shifted from interest rate assets to physical currency. The sustained rise in gold implies that the credit of fiat currencies, represented by the US dollar, has entered a downward cycle. Deconstructing the contraction of US dollar credit: first, in the era of low interest rates, the tendency towards fiscal deficit monetization has led to continuously rising debt ratios in developed countries like the US, with the disorderliness of fiscal discipline persistently eroding fiat currency credit. Second, the continuous strengthening of deglobalization trends, which began to emerge during Trump’s first term, has intensified global trade protectionism and right-wing sentiment following the COVID-19 pandemic and Trump’s second term. Under the narrative of restructuring the world order, frequent geopolitical conflicts, rising risk aversion, and the declining status of the US dollar as the world’s currency have driven a sustained wave of central bank gold purchases. The development of digital currencies like gold stablecoins has further expanded the buying power for physical gold.
Regarding platinum, palladium, and base metals, Wang Meidan, a researcher in the Non-ferrous and New Materials Group at CITIC Futures, stated in an interview with Securities Times:
