On February 3, the precious metals market recently experienced a historically rare liquidity shock, with last Friday's sharp decline being viewed as a watershed moment for market sentiment. OEXN indicated that the catalyst for this violent fluctuation was not a sudden deterioration in fundamentals, but rather the removal of long-standing political uncertainty that had plagued financial markets, triggered by the confirmation of the future leadership of the Federal Reserve. As the long-anticipated event finally materialized, the substantial safe-haven premium that had built up began to rapidly unwind.
Regarding the impact of the Fed Chair nomination on market trends, OEXN believes the specific individual chosen is not the core issue; the key is that the variable of "uncertainty" has been removed from the equation. Although Kevin Warsh is perceived as having a hawkish stance, the Federal Reserve, as a collective decision-making body, still maintains policy continuity. However, the gold market had previously been in a state of severe speculative overheating. Statistics indicate that a massive influx of non-professional investors lacking deep industry understanding had recently poured in, leading to excessively crowded long positions, which also left gold without sufficient support during the pullback.
The performance of the silver market once again confirmed its high-risk nature. OEXN stated that silver often faces liquidity drying up in such extreme market conditions, even being regarded by some veteran analysts as a "death trap." With the involvement of technical selling, the decline in precious metals was further amplified. Currently, the guidance from technical analysis far outweighs that of fundamentals. Fibonacci retracement levels suggest gold's next key technical target is seen at $4225, while silver could potentially test the $66 level.
In other metal segments, platinum, after touching the key level of $1954, faces potential downward pressure of $300, while palladium is also approaching a support zone around $1560. OEXN believes that although safe-haven funds are withdrawing in the short term, the long-term discussion regarding central bank independence is not over. As long as market concerns about administrative intervention in monetary policy persist, the long-term premium for gold will not completely disappear.
In summary, this deep correction represents a self-adjustment by the market following extreme crowding. Although technical indicators point to a bearish short-term outlook, in the long run, the repricing of risk premium helps the market return to rationality. OEXN advises investors to monitor key Fibonacci support levels while remaining vigilant about volatility risks in high-leverage instruments like silver, waiting for liquidity to stabilize once again.
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