Editor’s Note
This article reports on a sharp, simultaneous correction in gold and silver prices on February 5th. The data cited is from the spot market at the time of writing.
The precious metals market experienced a sudden correction.
On February 5th, gold and silver prices fluctuated simultaneously, with both spot and futures markets under collective pressure.
In the spot market, as of press time, spot gold (London) fell sharply by 1.77% intraday to $4,880.471 per ounce, hitting a low of $4,788.74 per ounce during the session. Spot silver (London) saw an even steeper decline, plummeting 10.63% intraday to $79.265 per ounce, with a low of $73.485 per ounce, indicating a correction far more severe than gold’s.
The futures market followed suit. As of press time, COMEX gold futures fell 0.96% intraday to $4,903.3 per ounce, touching a low of $4,805 per ounce. COMEX silver futures dropped sharply by 6.89% to $78.58 per ounce, with a low of $73.435 per ounce.
Zeng Fangfang further analyzed that personnel changes at the Federal Reserve remain the biggest trigger for the precious metals correction. Trump’s nomination of the hawkish figure Warsh as the next Fed Chair has shaken market confidence in the interest rate cut path, boosting the US dollar and putting pressure on gold prices. Simultaneously, after nearly a month of sharp gains, a large number of profit-taking positions chose to close positions at high levels to lock in profits, creating a strong technical correction demand in the market itself. The negative news triggered concentrated profit-taking. Additionally, the Chicago Mercantile Exchange raised margin requirements for silver futures, and domestic exchanges also limited new position openings, squeezing the survival space for high-leverage investors, triggering forced liquidations and margin calls. Chain stop-losses triggered by algorithmic trading further amplified the decline.
Regarding the phenomenon of silver’s decline being significantly greater than gold’s, Xia Yingying, Head of Precious Metals and New Energy Research at Nanhua Futures, analyzed that during the Asian morning session on Thursday, silver prices plunged sharply, with trading-level factors likely being the main cause. This round of decline was accompanied by a rebound in the US dollar index, simultaneous weakness in Bitcoin and US stocks, coupled with the Guotou Silver LOF fund hitting its fourth consecutive daily limit down. At the futures level, the market showed a pattern of declining with reduced open interest. In a high-volatility environment, the “longs killing longs” scenario further intensified the downward pressure on silver prices.
News and data also reinforced the correction pressure on precious metals. Xia Yingying added that Federal Reserve Governor Cook recently stated that now is an appropriate time for the Fed to stand pat and observe economic developments. On the data front, although the US ADP employment data released on Wednesday evening fell short of market expectations, the ISM Services PMI maintained a strong expansion trend, especially with the price index climbing. This kept market expectations for a Fed rate cut in May persistently low, further weighing on the precious metals market.
Looking ahead, the one-sided rally may have ended. In the short term, the market will be more driven by policy expectations and economic data. It is necessary to closely monitor changes in core factors such as Warsh’s testimony at the Senate Banking Committee hearings from mid-to-late February to March, as well as US economic data.
From a medium to long-term perspective, Zeng Fangfang pointed out that the fundamental logic supporting the strength of precious metals has not been shaken: global central banks still have sustained gold purchasing demand, the weakening trend of the US dollar credit system remains unchanged, and geopolitics will still be a key investment factor in 2026. This will continue to push up the risk premium for precious metals.
From a technical perspective, today’s volatility in precious metals is an aftershock of the暴跌 in previous days. The subsequent trend will still depend on fundamentals, including Sino-US relations, geopolitical situations, government debt expansion in various countries, and central bank policy orientations. In the long run, the probability of precious metals fluctuating and strengthening is slightly higher.
Facing the current market conditions, a rational response is crucial. Zeng Fangfang suggested that in a high-volatility environment, investors should strictly avoid excessive leverage, strictly control positions, reasonably assess their own risk tolerance, and avoid heavy bets. It is recommended that those not yet in the market prioritize a wait-and-see strategy, waiting for clear signs of stabilization. Furthermore, one should view the allocation of precious metal assets from a long-term perspective, treating them as part of a family asset portfolio, keeping them within a reasonable proportion, and may appropriately pay attention to other non-ferrous metals like platinum and palladium.