On February 2nd, following a historic surge and subsequent retreat last week, the precious metals market stands at a critical inflection point of tug-of-war between bullish and bearish forces. EasyMarkets stated that although short-term market sentiment has fluctuated due to profit-taking, major investment bank JPMorgan has clearly sent a strong bullish signal, setting a year-end 2026 gold price target of $6,300 per ounce. The core logic behind this forecast is that the global economy is in a long-term cycle where physical assets systematically outperform paper assets, and the structural allocation trend favoring gold as "hard currency" is far from reaching its peak.
Entering this Monday, the market indeed faced significant selling pressure. Spot gold prices extended their decline, plunging over 5% during the early session to touch a low of $4,677.17, a substantial retreat from the historical high of $5,594.82 set last Thursday. EasyMarkets indicated that an adjustment of this magnitude is not uncommon in markets experiencing rapid upward moves. Data shows that the cornerstone supporting the medium-term upward trend for gold remains the unquenchable demand for reserve diversification by central banks worldwide. Global central bank gold purchases are projected to remain at a high level of 800 tonnes in 2026; this persistent buying from official institutions provides solid structural support for gold prices, making the current decline appear more like a technical "deep shakeout" within a bull market.
Simultaneously, investor sentiment is diverging, particularly in the comparison between gold and silver. EasyMarkets believes gold's role as a multi-functional portfolio hedge is becoming increasingly prominent during turbulent times. As the global macroeconomic environment and geopolitical maneuvers grow more complex, not only official institutions but also private sector funds are accelerating their inflows into physical gold bars, coins, and related ETFs. This overlay of multi-layered demand is the foundation for the confidence that gold prices can still be projected to reach $6,300 even after a record pullback.
In contrast, silver's price action appears more dramatic and fraught with uncertainty. EasyMarkets noted that spot silver recorded a drop exceeding 6% on Monday, with its price retreating to around $78.90, forming a stark contrast to its peak of $121.64 last Thursday. Unlike gold, the silver market lacks a structural bottom supporter like central banks, which typically "only buy and do not sell." This means that during downtrends, silver often experiences deeper and more painful deleveraging processes. Relevant data suggests a risk that the Gold-to-Silver Ratio could climb further in the coming weeks; the characteristic of "excessive volatility" displayed by silver when tracking gold's gains creates a relatively higher entry barrier at present.
However, for long-term holders of silver, the outlook is not entirely bleak. EasyMarkets stated that even though silver's recent performance has been relatively weak, its overall price baseline has shifted upwards. Current analysis generally suggests that silver is unlikely to completely surrender its previous gains, with its average bottom having risen to the range of $75 to $80 per ounce. This elevation of the bottom is essentially a "catch-up rally aftermath" driven by gold's strength; although the corrections are severe, the overall price center of gravity continues to trend upwards amidst fluctuations.
Looking ahead to the subsequent trends in 2026, EasyMarkets believes investors should not be blinded by short-term, single-day sharp declines. Within the context of a structural bull market, every violent price retracement often serves to flush out excessive speculative leverage. As central banks' 800-tonne gold purchase plan is gradually implemented and the demand for hedging with physical assets is further unleashed, the momentum for gold's advance towards $6,300 remains robust. During the current period of volatility, closely monitoring movements in the US dollar exchange rate and real interest rates will be key to seizing the next opportunity for a gold price rally.
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