After a dramatic crash that sent shockwaves through commodity markets, gold and silver have staged a formidable rebound, clawing back losses and reigniting investor optimism. The recent price action follows an unprecedented unwind from an earlier parabolic rally that had previously seen gold surge to all-time highs above $5,500 per ounce.
Spot gold rose by more than 5%, recovering to around $4,930.97 per ounce, while gold futures rallied 6.4% to nearly $4,949. Silver prices also came roaring back, climbing over 6% to around $84.29 per ounce, after a dramatic 30% drop on Monday, its worst single-day performance since 1980. Futures for the white metal jumped nearly 10%.
Markets had been grappling with extreme volatility in both gold and silver heading into February, with the sudden sell-off attributed to a combination of technical factors and macroeconomic developments. From Friday to Monday, gold and silver prices shed 13% and over 30% respectively, erasing weeks of gains in a matter of hours. Analysts cited a sharp rebound in the U.S. dollar, profit-taking, and rebalancing ahead of the weekend, along with a spike in margin requirements for speculative trades, as key triggers of the collapse.
Just weeks ago, gold and silver had surged to fresh records, driven by a swelling chorus of global geopolitical tensions from U.S. trade uncertainty and Middle Eastern unrest to the seizure of Venezuela’s president, Nicolás Maduro. President Donald Trump’s unconventional policies and unpredictable maneuvers, including threats of tariffs on European countries and tensions with China, had also amplified perceived risks in global markets, boosting gold’s appeal as a traditional safe-haven asset.
Central bank purchases have also played a decisive role in driving price increases over the past year, with China emerging as the largest buyer. This trend accelerated after the U.S. froze Russia’s U.S. dollar assets, prompting nations to diversify their reserves into gold and reduce their dependence on the U.S. dollar.
But the rally that peaked last week ultimately became unsustainable. According to Mark Matthews of Bank Julius Baer, the prior speculative surge had made the market vulnerable to a correction. “Once profit-taking started, it just snowballed,” said Matthews, noting that gold had gone “parabolic” in the preceding days.
Despite the sharp pullback, major banks like Deutsche Bank remain bullish. The bank reiterated its forecast that gold could hit $6,000 per ounce, arguing that the broader investment case remains intact. “Gold’s thematic drivers remain positive... The conditions do not appear primed for a sustained reversal in gold prices,” said Deutsche Bank in a note, adding that the sell-off was “an exaggerated reaction to short-term catalysts.”Barclays echoed the sentiment, noting that stretched technicals played a role, but long-term demand, fueled by reserve diversification, policy concerns, and geopolitical risk, would continue to support prices.
Investors also reentered the market with conviction. Exchange-traded funds (ETFs) and mining stocks linked to precious metals surged on Tuesday. In London, mining heavyweights such as Anglo American and Antofagasta rose more than 3%, while top silver producer Fresnillo gained 3.1%. In the U.S., ETFs such as the ProShares Ultra Silver ETF surged by 15% in early trading. At the same time, the iShares Silver Trust (SLV) and the abrdn Physical Silver Shares ETF both added approximately 8.3%. U.S.-listed mining companies also benefited. Endeavour Silver gained 7.5% in pre-market trading, while Coeur Mining and Hecla Mining each jumped over 7%.
The broader financial landscape remains volatile. A partial U.S. government shutdown has delayed key economic reports, including January’s jobs data, increasing uncertainty about the near-term outlook. Furthermore, U.S.-Iran negotiations are scheduled to take place in Turkey, marking the first high-level dialogue amid escalating nuclear tensions.
Meanwhile, President Trump’s nomination of Kevin Warsh, viewed as market-friendly and a potential candidate for the next Federal Reserve Chair, has led to a rally in the dollar and a reassessment of expectations regarding Federal Reserve policy. However, even with improved risk sentiment driven by rising gold prices, investors continue to hedge against uncertainty. “When you own gold, it’s not attached to debt or company performance,” said Nicholas Frappell of ABC Refinery. “It’s a really good diversifier in a very uncertain world.”
Silver’s volatility has grabbed particular attention due to its relatively smaller and more speculative market. Greater retail participation means silver prices can swing quickly with shifts in trader sentiment. That said, silver’s long-term outlook remains compelling. Zavier Wong, market analyst at eToro, noted that silver’s fundamentals remain strong. “It may be too simplistic to attribute the entire move to speculation,” Wong said. “Silver has genuine industrial applications, especially in solar photovoltaics and AI infrastructure.”
According to recent research, silver demand is projected to surge to as high as 54,000 tonnes annually by 2030, while supply is expected to trail significantly. The solar industry alone could absorb up to 14,000 tonnes a year, or over 40% of the total projected supply.
The rebound in gold and silver also invigorated equity markets across Asia and Europe. Japan’s Nikkei 225 soared nearly 4% to an all-time high, driven by gains in tech and financials. China’s Shanghai Composite and Shenzhen Component Index both rallied, while Australia’s ASX 200 snapped a four-day losing streak, lifted by strength in materials stocks. European indices also responded positively, with the STOXX 600 and STOXX 50 climbing to fresh records. Mining stocks led the way, benefiting from an upswing in precious metals.
While recent price swings have highlighted the inherent risks of trading in precious metals, the underlying demand story remains intact. Central bank diversification, geopolitical instability, industrial usage for silver, and continued investor interest could provide a floor under prices.
For now, gold and silver are proving resilient, bouncing back strongly after one of their most brutal declines in decades and investors appear willing to buy the dip, reaffirming their faith in the long-term appeal of precious metals. And with Deutsche Bank and others predicting further upside, the historic sell-off may be remembered as a reset, rather than a reversal.