Gold and Silver Find Footing After Turbulent Sell-Off, But Analysts Urge Caution
Gold and silver prices showed tentative signs of stabilization on Monday, attempting to recover from a severe sell-off late last week that abruptly halted a parabolic rally and left investors questioning the durability of the metals' recent historic gains.
The dramatic reversal, which one analyst described as "the dam breaking," saw gold futures (GC=F) shed over 9% on Friday before hovering near $4,700 per troy ounce Monday. Silver futures (SI=F), which had skyrocketed more than 60% in January, extended losses, slipping toward $76 per ounce after a 25% Friday plunge.
Market participants largely attributed the initial shock to political uncertainty, specifically former President Donald Trump's nomination of Kevin Warsh for Federal Reserve Chair, which triggered a wave of profit-taking. "The parabolic moves we witnessed were simply unsustainable," noted Tom Essaye of Sevens Report Research.
However, the sharp swings in these assets, traditionally viewed as portfolio stabilizers, have unsettled some veterans. "These swings in safe haven investments are a little bit disturbing," said Nancy Tengler, CEO of Laffer Tengler Investments. She advised investors to "move aside and wait for things to settle," characterizing the recent action as a momentum trade best avoided for now.
Long-Term Drivers Remain
Despite the near-term turbulence, the fundamental narrative for gold hasn't been entirely dismantled. Analysts point to sustained central bank buying, a weakening U.S. dollar fueling the 'debasement trade,' and strong private investor demand. In a weekend note, JPMorgan analysts reaffirmed their bullish long-term stance, forecasting that demand could ultimately push gold to $6,300 per ounce by late 2026, asserting that "longer-term rally momentum will remain intact."
Silver's wild ride has been linked even more closely to speculative fervor, particularly among Chinese traders. JPMorgan expects a higher price floor for silver between $75-$80, suggesting it is "unlikely to fully relinquish its recent gains."
A Call for Patience
With the Chinese New Year holiday approaching and exchanges raising margin requirements, near-term appetite may be limited. Ole Hansen of Saxo Bank cautioned that "patience appears warranted," and chasing the market now may not be prudent.
Read more: Navigating Silver Price Volatility: A Strategic Guide for Investors
Market Voices: Reactions to the Rollercoaster
Michael Chen, Portfolio Manager at Horizon Wealth: "This is a healthy correction in a longer-term bull market. The macro drivers—geopolitical risk, debt concerns, and diversification away from fiat—haven't changed. This pullback offers a better entry point for strategic allocators."
Sarah Gibson, Independent Commodities Trader: "It's pure madness. One headline from the political circus and these 'safe' assets drop double-digits? It exposes the whole narrative as fragile. The algos and speculators have completely distorted these markets, turning them into casinos."
David Park, Chief Economist at Sterling Insights: "The volatility underscores the market's sensitivity to Fed policy expectations. Warsh's perceived hawkishness triggered a re-evaluation. The key question is whether central bank demand, which has been a massive floor, remains consistent at these elevated price levels."
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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