Gold Slump Eases as Traders Weigh Unwinding of ‘Crowded’ Bets
As of February 2, 2026, the dramatic slump in gold prices has begun to stabilize after a period of intense volatility that saw the metal drop 10% from recent record highs. Spot gold is currently trading near $4,708–$4,791 per ounce, recovering slightly from an intraday low earlier this session.
Market Drivers and The "Crowded" Trade
The sudden reversal followed a "YOLO" crowd-fueled rally that pushed gold to a record peak of $5,608 on January 29, 2026. Analysts attribute the subsequent crash to several converging factors:
The "Warsh" Effect: The nomination of Kevin Warsh to lead the Federal Reserve by President Trump triggered a surge in the U.S. dollar, as markets anticipate a more hawkish stance on interest rates.
Unwinding of Leveraged Bets: Massive speculative positions in gold and silver became "overcrowded," leading to a brutal chain reaction of selling as profit-taking turned into a forced exit for many leveraged traders.
Increased Margins: The CME Group raised margin requirements for gold and silver futures, further pressuring traders to liquidate their positions.
Key Financial Statistics
Metric Current Value (Feb 2, 2026) Peak Value (Jan 29, 2026)
Spot Gold (oz) $4,708.19 $5,594.82 - $5,608
Spot Silver (oz) ~$82.00 $121.64
Future Outlook
Despite the recent "gut check," many major institutions remain bullish for the remainder of 2026:
J.P. Morgan issued a note on February 2, 2026, forecasting that gold will reach $6,300 per ounce by the end of the year, driven by continued central bank diversification.
Deutsche Bank reiterated a forecast of $6,000 per ounce, citing sustained investor demand despite the current price adjustment.
