Following a historic plunge and extreme volatility, the gold and silver markets stand at a critical crossroads. Although precious metal prices have staged a technical rebound after the recent record-breaking sell-off, a significant divergence persists among market participants as to whether this is a fleeting "dead cat bounce" or the resumption of a long-term bull trend. Institutional investors have drastically reduced their exposure due to extreme volatility, quantitative funds maintain their selling patterns, while retail investors in the physical market have displayed remarkable enthusiasm for "buying the dip."
The latest market dynamics indicate that gold and silver prices are attempting to stabilize after a sharp correction. According to Goldman Sachs data, this sell-off, by some metrics, even surpassed previous extreme market conditions, with COMEX gold and silver recording their largest single-day declines since the early 1980s. Although prices have recovered from their lows, volatility remains at extremely high levels, and options liquidity once dried up, suggesting the market structure is still fragile and may continue to face unstable two-way price fluctuations in the short term.
This turmoil has had a direct and polarizing effect on market sentiment. On one hand, Wall Street institutional traders are urgently reducing directional risk; Goldman Sachs' trading desk noted that extreme volatility makes holding large positions "very uncomfortable" and advised scaling back position sizes. On the other hand, demand in the physical market is exceptionally strong. Bloomberg reported that from Singapore to Sydney, and to China's gold trading hubs, large numbers of retail investors queued to purchase gold bars and jewelry, attempting to enter the market on price dips. This robust retail buying has provided some support for gold prices.
Despite the uncertain short-term outlook, mainstream institutions have not entirely abandoned their long-term bullish views. Deutsche Bank reiterated its $6,000 per ounce price target for gold, believing the macro drivers remain unchanged. Goldman Sachs' research department also maintained its forecast for gold to reach $5,400 by December 2026, citing continued central bank buying and the potential path for Federal Reserve rate cuts. The current market focus is on whether the resilience of physical demand is sufficient to offset the pressure from technical chart damage and institutional deleveraging.
From a technical perspective, the short-term trajectory of precious metals still faces severe challenges. Analysis from The Market Ear indicates that gold briefly broke below its 50-day moving average and uptrend line during the recent chaos. Although the subsequent rebound pushed it back above the 21-day moving average, significant resistance is evident overhead. Initial resistance is near $5,100, roughly corresponding to the 50% retracement level of the previous large bearish candlestick (excluding shadows), with the 8-day moving average situated just below it.
Silver's technical repair appears even more challenging. Although silver prices have also rebounded, the price action is described as "quite weak." Silver remains constrained by the 21-day moving average overhead, with resistance near $92, and still has a considerable distance to retrace to the 50% level of the暴跌 candle (around the $100 area). The Market Ear points out that silver volatility remains around 85%, implying potential daily price swings of 5.5%; such intense volatility requires more time to "cool down."
Furthermore, the activity of quantitative funds is exacerbating downward pressure. According to Goldman Sachs' predictive models, Commodity Trading Advisor (CTA) strategies have either turned to selling or maintained selling modes for both gold and silver. Data from Menthor Q also shows that the silver market experienced aggressive forced selling. Although high volatility might attract some strategies that sell volatility for yield enhancement, potentially providing short-term stability, gold prices may need time to consolidate before a new directional trend emerges.
Facing unprecedented volatility, institutional investors have adopted a more cautious, defensive posture. Kim, a Goldman Sachs commodity trader, stated that the desk has significantly reduced its directional risk exposure. While the medium-term structural trade logic remains intact, the rapid front-loading of investment demand caused prices to rise too quickly, making holding large beta assets currently unsettling. Kim noted that the volatility market is dislocated, with the front-end of the volatility curve being very expensive, and advised investors to substantially reduce position sizes when trading, as the nominal value and volatility represented by "one ounce of gold" now far exceed that of a year ago.
Jay Hatfield, Chief Investment Officer at Infrastructure Capital Advisors, pointed out that the market had shifted to momentum trading rather than fundamentals weeks ago, and this暴跌 was a result of momentum breaking down. Dominik Sperzel, Head of Trading at Heraeus Precious Metals, frankly admitted that this is the wildest market action he has witnessed in his career, noting that gold, traditionally a symbol of stability, has clearly deviated from this attribute with such violent swings.
In stark contrast to institutional caution, retail investors in global physical markets have demonstrated strong buying intent. Bloomberg reported that on the Monday following the gold price crash, queues formed outside the headquarters of United Overseas Bank (UOB) in Singapore to purchase gold bars, with products from well-known brands like MKS PAMP SA selling out quickly.
Similar scenes unfolded in Sydney and Thailand. In Sydney, long lines formed outside ABC Bullion stores; despite some investors incurring losses the previous Friday, others saw it as a prime entry opportunity. In Thailand, Globlex Securities CEO Thanapisal Koohapremkit indicated that local markets maintained a buying trend, with investors inclined to hold positions and wait.
In China, the approach of the Lunar New Year, a traditional peak consumption season, provided market support. Liu Shunmin, Risk Manager at Shenzhen Guoxing Precious Metals Company, noted that a significant number of bargain hunters had flocked to buy gold jewelry and bars over the past two days. However, buying interest in the silver market was relatively weaker. Goldman Sachs analysis highlighted that physical buying from China and India were key drivers of the previous rebound, and the recovery of retail interest will be a crucial signal for market stabilization.
Despite the severe short-term setback, major financial institutions' long-term structural bullish views on gold remain largely unchanged.
Goldman Sachs commodity researcher Struyven maintained the forecast for gold to reach $5,400 by the end of 2026. This prediction is based on three core assumptions: central banks will continue buying gold at an average pace of 60 tonnes per month; the Federal Reserve will implement two rate cuts in 2026; and private sector gold allocations remain stable. Struyven emphasized that since global macro policy uncertainties (such as fiscal sustainability in developed markets) are unlikely to be fully resolved by 2026, and gold's allocation within investment portfolios remains low, the potential for further private sector diversification into gold is significant, meaning price risks remain skewed to the upside.
Deutsche Bank also stated in a Monday report that it stands by its forecast for gold to reach $6,000 per ounce. Market views suggest that the core drivers pushing gold prices higher—including the unpredictability of Trump's policies and the "currency debasement trade" fueled by investor concerns over money and sovereign bonds—have not changed due to the price correction.
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