Editor’s Note
This article highlights the recent extreme volatility in precious metals, with gold experiencing dramatic swings from over $5,600 to below $4,700 per ounce within days, before rebounding above $5,000. Such price action underscores the heightened sensitivity of these markets to current macroeconomic and geopolitical forces. Investors are advised to exercise caution.
Recently, the gold market has once again witnessed thrilling price movements: from $5,200 per ounce on January 28th, to $5,500 on the 29th, reaching a high of $5,600 on the 30th, followed by a sharp plunge on the 31st, breaking through the $4,700 per ounce mark. On February 9th, spot gold staged a strong rebound after last week’s severe volatility, reclaiming the psychological barrier of $5,000 per ounce. Simultaneously, spot silver also broke through the $80 per ounce mark.
Breaking through the key psychological level of $5,000 also signals a temporary stabilization for gold prices after the “cliff dive.” This sudden rebound has left countless investors both excited and anxious—has the spring for the precious metals market really arrived?
As of 9:00 AM Beijing Time on February 9th, spot gold was quoted at $5,041 per ounce, with an intraday gain of over 1.5%; spot silver was quoted at $80 per ounce, surging 2.9% intraday. In the domestic market, the main silver futures contract on the Shanghai Futures Exchange performed even more remarkably, soaring over 8%, with an intraday peak gain of 9%, reaching 20,813 yuan per kilogram. COMEX silver futures were equally impressive, rising over 4% to $80.13 per ounce.
It is worth noting that this is not the first time precious metals have shown strength recently. As early as February 5th, spot gold had already extended its strong performance, rising over 1% intraday and breaking the $5,000 per ounce barrier. This pattern of sharp rises and falls fully demonstrates the high volatility currently present in the precious metals market.
Regarding the recent performance of the precious metals market, industry insiders believe that while easing geopolitical tensions in the Middle East have weakened safe-haven demand, expectations for U.S. interest rate cuts, weak employment data, and heightened anticipation of Federal Reserve easing have collectively supported gold’s appeal.
Faced with such intense market volatility, how do professional institutions view the situation? Several brokerage research reports have provided their analyses.
Zhengxin Futures’ research report points out that the market still carries extremely high uncertainty and advises investors to maintain a cautious stance. However, from a medium- to long-term perspective, structural supply-demand imbalances in precious metals persist and will benefit from multiple factors including geopolitical disturbances, central bank gold purchases, and ETF investments. The long-term upward trend is unlikely to change.
A research report released by Galaxy Securities stated that metal assets may continue to experience volatile consolidation this week, and close attention should be paid to the U.S. January CPI data to gauge inflation stickiness and subsequently adjust expectations for Fed policy. From a medium- to long-term perspective, the core logic of the precious metals bull market has shifted from short-term interest rate games to hedging against long-term U.S. dollar credit risks and the restructuring of the global monetary system. Regarding silver, Galaxy Securities warned of its small market capacity and susceptibility to market manipulation, advising vigilance against risks from leveraged fund stampedes.
Shenyin & Wanguo Futures analyst Chen Mengyun stated this, but she also noted that, from a long-term perspective, the supportive factors for gold’s upward movement have not reversed.
Zheshang Securities indicated that in the short term, gold and silver face disturbances from liquidity shocks and shifts in risk appetite, but it maintains its medium- to long-term judgment that “gold is stronger than silver.” At the operational level, it suggests using a decline in volatility as an indicator for increasing allocations. If gold’s implied volatility retreats from high levels and enters a relatively stable range, it typically signals a mitigation of liquidity shocks and more orderly market pricing, significantly improving gold’s risk-return profile. At that point, the medium-term investment opportunity in gold would be more worth capturing.
With the Spring Festival approaching, whether to liquidate positions before the holiday or hold them through it has become a common topic of concern for investors.
A Galaxy Securities research report points out that the core logic for gold has shifted from short-term interest rate games to hedging against long-term U.S. dollar credit risks and the restructuring of the global monetary system. This means investors need to view gold’s investment value with a longer-term perspective.
This is the view of Wang Qiang, Senior Strategy Analyst at China Asset Management.
Regarding silver, special attention must be paid to its characteristics of small market capacity and susceptibility to manipulation, remaining vigilant against stampede risks brought by leveraged funds. In contrast, the prospects for industrial metals are clearer, as they will be more significantly driven by the global green transition trend, with a favorable long-term demand structure.
Analyses from multiple institutions suggest that the recent intensified volatility in the precious metals market is mainly influenced by international political factors and speculative sentiment following the rapid short-term rise. However, from a fundamental perspective, demand in the gold market has not changed, and silver prices continue to be supported by steadily growing production demand from the industrial sector. Overall, they are optimistic about the rebound potential for gold and silver prices.
For ordinary investors, how should they respond to the current market? Analysts generally recommend maintaining a wait-and-see attitude for now. After the market undergoes sufficient adjustment, gold is likely to return to an upward trajectory. Investors need to be patient and avoid blindly chasing rallies or selling off during severe volatility.
It is worth mentioning that due to its relatively smaller market size, silver prices often experience more violent fluctuations. If investors consider allocating to silver, it is even more crucial to strictly control position sizes and avoid excessive use of leverage to prevent unnecessary losses from sudden price swings.
The precious metals market has always been a safe haven during times of economic uncertainty. The current global economy faces multiple challenges, with geopolitical risks emerging one after another and inflationary pressures lingering. These factors all support the long-term value of precious metals. However, the intense short-term volatility also reminds us that any investment requires rational analysis and cautious decision-making.
The market always moves forward amidst fluctuations. Only by grasping the unchanging underlying logic can one maintain their investment course amidst the winds of change. Spot gold reclaiming $5,000 may just be a beginning; the story of the precious metals market will continue to unfold.
