Around January 30, 2026, a major plunge in precious metals occurred, primarily due to profit-taking at high levels, compounded by leveraged sell-offs, margin increases, and a reversal in Federal Reserve policy expectations, resulting in a "flash crash." Here are the key details:
1. Core Trigger: Profit-Taking at High Levels
In January, gold rose more than 30% in a single month, silver prices increased nearly 70%, and London gold once broke $5600, accumulating a massive profit pool. Institutions and speculative funds concentrated their realizations at historical highs, triggering the first round of selling. The technical indicators showed serious overbought conditions (RSI broke 80 at one point), indicating a strong demand for correction.
2. Key Drivers of Amplified Declines
• Leveraged Sell-Offs: CME and others raised margin requirements for precious metal contracts, increasing financial pressure on high-leverage traders, triggering stop-loss orders as prices fell, creating a cycle of "liquidation selling—price decline—forced liquidations," with algorithmic trading amplifying volatility.
• Reversal of Policy Expectations: Trump nominated the hawkish Kevin Walsh as Federal Reserve Chairman, leading the market to bet on a cooling of rapid rate cut expectations, causing the dollar to strengthen and real interest rates to rise, which suppressed precious metals.
• Weak Market Structure: Silver, due to its small size and low liquidity, experienced volatility much greater than gold, with the main silver futures contract on the New York Mercantile Exchange dropping 31.37% in a single day, marking the worst performance since March 1980.
3. Market Overview (as of February 2, 5:50 AM)
• London Gold Spot: $4884.36/ounce, down 10.18%.
• London Silver Spot: $85.115/ounce, down 19.98%.
• Gold T+D: 1070 yuan/gram, down 9.47%.
• Silver T+D: 23420 yuan/kilogram, down 19.00%.
4. Future Market Outlook and Operational Tips
• Short-Term: May fluctuate to find a bottom, with key support at London gold $4750-$4850/ounce, with silver being more volatile.
• Mid-Term: Long-term support from central bank gold purchases and de-dollarization remains, with the sharp declines being more of a technical correction.
• Operations: Control positions and leverage, accumulate in batches at lower prices, avoid chasing highs; pay attention to Federal Reserve policies and margin dynamics. #恭喜发财 $ congratulations and wealth
