Gold and Silver Seek Footing After Historic Rout; Shutdown, Iran Tensions May Reignite Haven Demand
Gold and silver futures staged a fragile rebound in early Monday trading, attempting to recover from a brutal sell-off that sent prices to four-week lows and rattled global markets to close last week.
The dramatic moves saw silver futures (SIH26) plummet a record 26% on Friday, while gold (GCJ26) fell 9%—its steepest daily drop in over a decade. The plunge erased billions in market value and triggered a fresh round of margin requirement hikes by the CME Group over the weekend.
Analysts point to a confluence of factors behind the historic volatility. The nomination of perceived monetary hawk Kevin Warsh to lead the Federal Reserve strengthened the U.S. dollar, pressuring dollar-denominated metals. Meanwhile, reports emerged of significant losses among Chinese speculators, highlighting the risks of highly leveraged positions in these markets.
However, two emerging catalysts are now providing a potential floor for prices. A partial U.S. government shutdown, stemming from a stalled funding bill, has reintroduced a layer of domestic political uncertainty. Concurrently, while rhetoric has cooled slightly, underlying U.S.-Iran tensions remain elevated, preserving a key geopolitical risk premium.
"Markets are caught between a technical wreck and a fundamental rethink," said David Chen, a portfolio manager at Horizon Capital Advisors. "The leverage-fueled unwind was severe, but the macro drivers for haven assets—political dysfunction and a fraught Middle East—haven't disappeared. This creates a volatile base for any recovery."
The view was more pointed from Anya Petrova, an independent metals trader based in London. "This isn't a healthy correction; it's a warning shot," she argued. "When prices move this violently, it signals a market that's broken. The idea that a government shutdown—a self-inflicted Washington wound—or the same old Iran tensions will sustainably reverse this is naive. The speculative froth has been blown off, and it's not coming back tomorrow."
Other observers urged a longer-term perspective. Marcus Reynolds, a veteran commodity strategist, noted, "Friday's action was a necessary liquidity event. It shook out weak hands. But the structural case for metals, including institutional demand for portfolio diversification, remains intact. Short-term, prices may churn, but the drivers for the multi-year bull market are still in place."
As trading continues, the market's focus will split between technical repair and the evolving political landscape, testing whether safe-haven demand can outweigh the aftershocks of last week's record-setting declines.