International gold and silver prices experienced sharp fluctuations after recently hitting historic highs, with another steep decline on February 2. Compared to the all-time highs set on January 29, the cumulative decline in silver prices at the intraday low on February 2 has reached 40%, while gold prices have fallen by approximately 20%. Market analysts believe that against the backdrop of shifting global liquidity expectations, changes in Federal Reserve personnel, and highly concentrated speculative positions, the volatility in gold and silver prices reflects heightened instability in the precious metals market. This round of price fluctuations is the result of both technical adjustments and changes in policy expectations, signaling a shift in the investment logic that previously supported prices.

Market Turmoil: Gold and Silver Prices Experience a "Roller Coaster" Ride
On January 29, international gold and silver prices surged to historic highs before plummeting. Gold futures on the New York Mercantile Exchange fell nearly 7% in just 28 minutes, while silver prices plunged 11% over the same period. On January 30, the intraday decline in spot silver prices set a record since 1980. Gold prices, which had reached a high of $5,300 per ounce, briefly fell below the $4,700 mark. On February 2, gold and silver prices tumbled again, with spot silver prices dropping over 14% and spot gold prices falling more than 9% intraday.

Anthony Julian, a trader at the New York Mercantile Exchange, noted that when prices fall below key technical support levels, it triggers large-scale automated stop-loss trading, intensifying market sell-offs. Such selling can lead to cliff-like price declines in a short period.

Suki Cooper, a precious metals analyst at Standard Chartered Bank, explained in a report to clients that the recent sharp declines in gold and silver prices were not due to a sudden deterioration in fundamentals but were triggered by a liquidity squeeze. The previous market rally was driven by overly simplistic logic and extremely crowded positions, so once the trend reversed, it led to large-scale unwinding effects.

According to India’s Economic Times, the global gold and silver market lost over $3 trillion in value within a short period. The report noted that due to highly consistent bullish sentiment globally, significant profit-taking pressure had built up, leaving the market in a severely overbought state for an extended period.

Capital Outflow: Structural Adjustments by International Institutions
Behind the sharp price volatility lies structural adjustments in capital by international institutions. Data show that by the end of January, there was a significant mismatch between registered silver inventories and open interest on the New York Mercantile Exchange. This expectation of tight supply and demand was once the core driver behind the earlier surge in silver prices. However, when prices reached historic highs, the withdrawal of some large institutions disrupted this balance.

Data from the U.S. Commodity Futures Trading Commission indicate that several major international commercial banks significantly reduced their net long positions around the time of the sharp fluctuations in gold and silver prices.

Dominic Schneider, Head of Commodities at UBS Global Wealth Management, noted that institutional investors tend to act decisively in the face of uncertainty. When the underlying logic of the macroeconomic environment changes, securing profits becomes the preferred strategy.

Goldman Sachs mentioned in an industry briefing that the sharp volatility in the silver market highlights the unsustainability of speculative-driven rallies. Its monitoring shows that large hedge funds began hedging their long positions before the crash. When market sentiment shifted, these institutions used algorithmic trading to reverse their positions quickly, while retail investors lacking risk control measures were often forced to become liquidity providers. According to incomplete statistics, forced liquidations in the silver derivatives market alone recently amounted to billions of dollars in a single day.

Analysts at JPMorgan Chase pointed out that while this deleveraging process is painful, it is a necessary market correction in the long run. The flow of institutional capital indicates that funds are shifting away from high-risk volatility trading to observe the next phase of macroeconomic policy direction.

Repricing: Investment Logic Shifts Toward De-bubbling
Another major reason for the recent sharp fluctuations in gold and silver prices is the changing expectations regarding the U.S. dollar’s trajectory. On January 30, U.S. President Donald Trump announced the nomination of former Federal Reserve Governor Kevin Warsh as the next Fed Chair. Given Warsh’s previous emphasis on price stability and a strong dollar, investors widely expect the dollar to appreciate in the future.

Neil Shearing, Chief Economist at Capital Economics, analyzed that if U.S. interest rates remain at elevated levels, it would exert significant pressure on gold and silver prices, which do not generate interest income. After the Fed Chair nominee was announced, the U.S. dollar index rebounded in a short period, and the 10-year U.S. Treasury yield climbed.

Li Wei, Global Chief Investment Strategist at BlackRock, stated that this nomination has altered the underlying logic of market trading. Investors are shifting from speculating on interest rate cuts to repricing liquidity contraction risks. The outflow of funds from precious metals into U.S. Treasuries reflects a shift in the focus of safe-haven assets.

Consulting firm Roland Berger warned in a report that the volatility in the precious metals market reflects a restructuring of global asset pricing logic. The report noted that the depth of the silver market and the support from global central bank reserves are far inferior to gold, making it highly vulnerable to "devastating" liquidations when liquidity tightens. When assets deviate from their safe-haven nature due to excessive speculation, they themselves become the biggest risk.

Michael Hewson, Head of Commodities Research at Deutsche Bank, pointed out that the sharp decline in precious metals prices serves as a reminder that there is no absolute safe haven in the market. The global precious metals market is undergoing a de-bubbling process, with the driving force shifting from pure sentiment-driven factors to more rational macroeconomic data.

Analysts at the World Gold Council believe that although gold prices have experienced sharp short-term volatility, historical experience shows that this helps curb excessive speculation. Future market trends will depend more on the evolution of global real interest rate levels and the transparency of central bank gold purchases.