Precious Metals Rally Stalls: Gold Plunges to $5,100, Silver Tumbles 13% in Sharp Reversal
In a dramatic reversal, gold and silver futures plummeted on Friday, snapping a historic rally that had captivated commodity markets for months. Gold (GC=F) fell 5% to settle around $5,100 per ounce, a steep drop from recent highs above $5,600. Silver (SI=F) faced an even steeper decline, tumbling 13%.
The sell-off in precious metals coincided with a broad-based retreat in equity markets, led by a slide in technology stocks, suggesting a wave of risk aversion washing across financial markets.
Analysts pointed to extreme volatility and thinning market liquidity as key catalysts for the sharp pullback. "The continued surge across metals, especially gold and silver, is entering a dangerous phase," noted Ole Hansen, head of commodity strategy at Saxo Bank, on Thursday. "The problem is volatility feeding on itself. As price swings intensify, liquidity thins."
Mike McGlone, senior commodity strategist at Bloomberg Intelligence, offered a historical perspective. "The higher metals rise, the more likely 2026 will mark enduring price peaks — notably for silver — if history is a guide," he wrote Friday, cautioning that rapid price increases can quickly alter fundamental supply-demand dynamics.
Background & Analysis: The rally, which had seen gold rise roughly 15% year-to-date and silver surge about 28%, was largely fueled by a weakening U.S. dollar and strong inflows from private investors seeking inflation hedges and portfolio diversification. Just last week, Goldman Sachs reiterated a year-end gold target of $5,400, citing sustained investor interest. The Fed's recent decision to hold rates steady, coupled with commentary perceived as dovish, had further pressured the dollar and propelled gold past $5,500 earlier in the week.
The reversal raises questions about the sustainability of the "debasement trade"—betting against fiat currency strength. Robin Brooks, a senior fellow at the Brookings Institution, had observed prior to the drop that conviction in a weaker dollar was high, which was "super-charging" the trade. Friday's action suggests some of that conviction may be wavering under the weight of extreme price moves.
Silver, which had briefly topped $120 per ounce during its parabolic rise, was trading near $99 by Friday's close. JPMorgan analysts had recently noted the metal had "significantly overshot" forecasts, while admitting that calling a top in such a momentum-driven market was exceedingly difficult.
Market Voices: Reactions to the Plunge
David Chen, Portfolio Manager at Horizon Wealth Advisors: "This is a healthy correction in an overheated market. The long-term drivers for gold—geopolitical uncertainty, central bank buying—haven't disappeared. For disciplined investors, this pullback could present a strategic entry point."
Maya Rodriguez, Independent Commodities Trader: "It was a bubble waiting to pop. The retail frenzy in silver was reminiscent of meme-stock mania. Fundamentals were left in the dust. This crash is a brutal but necessary reality check for speculators who thought prices only go up."
Sarah Wilkinson, Retail Investor: "I'm devastated. I moved a chunk of my savings into silver last month after seeing everyone talk about it online. Now I'm sitting on massive losses. It feels like the big players let the little guys buy at the top and then pulled the rug out. The market feels rigged."
Professor Arjun Mehta, Economics Department, Carlton University: "This volatility underscores the market's dual nature. Precious metals are reacting to monetary policy expectations and currency moves, but are also being traded as high-momentum risk assets. The latter component inevitably leads to violent corrections when sentiment shifts."
Reporting by Ines Ferre, Senior Business Reporter. Follow her on X @ines_ferre.
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