Editor’s Note
This article describes a significant deleveraging event in the global precious metals market in late January 2026, characterized by sharp, single-day price declines in both silver and gold. The views expressed attribute the volatility to institutional liquidity factors rather than a fundamental shift.
In late January 2026, the global precious metals market experienced a rare deleveraging event. Silver prices briefly fell below $75 per ounce, the first time since January 8, with a single-day drop of 35.12%. Gold also saw a sharp correction, briefly falling below $4,710 per ounce, with a single-day decline exceeding 12%. The market widely believes this crash was not a fundamental reversal but a liquidity washout triggered by institutional factors. The Chicago Mercantile Exchange (CME) raising margin requirements for precious metals futures is seen as the key trigger for the sell-off. Simultaneously, the hawkish stance of the new Federal Reserve Chair nominee, Kevin Warsh, strengthened expectations for a stronger US dollar, adding pressure to metal prices.
The precious metals market suffered a sharp decline in late January 2026. Silver briefly fell below $75 per ounce, a first since January 8, with a single-day plunge of 35.12%, wiping out over one-third of its value in just one day. Gold also corrected sharply, briefly dropping below $4,710 per ounce with a single-day loss exceeding 12%. Reasons include the CME raising futures margin thresholds and the market reacting to the potential hawkish stance of new Fed Chair nominee Kevin Warsh, which could strengthen the US dollar.
Zooming out, this precious metals supercycle began during the gold price breakout period from late 2023 to early 2024. Since early 2024, precious metals prices have embarked on a structural uptrend driven by the combined forces of inflation repricing, escalating geopolitical tensions, and tight physical supply.
Taking gold as an example, its price rose from around $2,039 per ounce in January 2024 to $4,862 by February 5, 2026, a cumulative increase of over 138%, formally establishing a long-term breakout pattern. Silver’s performance was even more extreme, soaring from $22.94 to $76.8 over the same period, a cumulative surge of 235%, making it the most leveraged asset in this precious metals rally.
Other industrial and strategic metals also strengthened. Platinum doubled from $920 to $2,003, a 118% increase; palladium rose about 72%; even copper, often seen as a cyclical indicator, climbed from $3.87 per pound to $5.79, a near 50% gain.
One of the biggest buyers in this precious metals bull market has been global central banks. In the World Gold Council’s 2025 Central Bank Gold Reserves Survey, 76% of respondent central banks expected gold’s share in reserves to increase significantly or moderately over the next five years. When asked if global official gold reserves would increase in the coming year, about 95% of central banks believed they would, with 43% stating they would increase their own country’s gold holdings. No central bank expected to reduce its holdings.
So, will these central banks keep buying? When will they sell?
For the first question, the reason global central banks are buying gold is to reduce concentration risk in the US financial system by increasing gold holdings. World Gold Council (WGC) data shows that between 2023 and 2025, global central banks (especially in emerging markets) continued net purchases of gold at historically high levels.
For the second question, reviewing past cases of central bank gold sales, the commonality is that official gold sales often occur when the world appears stable. This also means that even if the long-term structure remains favorable for gold, short-term price volatility can still be extreme. For investors, rather than making a one-time directional bet, it’s better to maintain operational flexibility, allowing positions to adjust quickly to policy, margin, and dollar movements.
Since January 2024:
- Silver (XAG): From $22.94/oz to $76.8/oz on Feb 5, 2026. Cumulative gain: 235%.
- Gold (XAU): From $2039/oz to $4862/oz. Cumulative gain: 138%.
- Platinum (XPT): From $920/oz to $2003/oz. Cumulative gain: 117.7%.
- Palladium (XPD): From $980/oz to $1681/oz. Cumulative gain: 71.5%.
- Copper: From $3.87/lb to $5.79/lb. Cumulative gain: 49.6%.
It’s evident that copper’s rally has significantly lagged. From an asset rotation perspective, entering for a potential catch-up rally is a reasonable entry point. When gold and silver enter a consolidation phase after deleveraging, it’s not unreasonable for funds to rotate into industrial metals. This type of cross-commodity allocation also increases demands on trading tools. Compared to the past where separate futures, CFD, or different broker accounts were needed, platforms like Bitget TradFi, which allow simultaneous allocation to gold and industrial metals within the same account, reduce the friction of executing asset rotation.
Looking further at copper demand, a report from the International Copper Association points out that a typical internal combustion engine vehicle uses about 23 kg of copper, while a pure electric vehicle uses about 83 kg. This means pure EVs demand 3.6 times more copper than ICE vehicles. With the gradual popularization of EVs, Reuters estimates that by 2030, EV demand for copper alone could reach a staggering 2.2 million tonnes per year.
But this is only a smaller part of copper demand. The fundamental demand driver for copper is the data centers of AI giants. Taking Nvidia’s HGX system for hyperscale AI data centers as an example, a single facility may require up to 50,000 tonnes of copper. Currently, global data centers use about 500,000 tonnes of copper annually, potentially increasing to about 3 million tonnes by 2050, a sixfold increase.
Beyond data centers, power grids also create substantial copper demand. Grid copper usage includes: transmission and distribution cables, transformers and substation equipment, switchgear, and some distribution busbars and connectors. This area, combined with construction and appliances, is itself a major component of copper demand.
S&P Global data shows global copper demand will grow from 28 million metric tonnes per year in 2025 to 42 million metric tonnes by 2040, a 50% increase. In contrast, the ICSG’s “World Copper Factbook 2024” indicates global mine copper production is about 22.4 million metric tonnes, suggesting copper is already showing signs of supply-demand imbalance.