During the Lunar New Year holiday, global precious metals markets experienced significant volatility, initially declining before staging a strong recovery, driven by fluctuating US-Iran geopolitical tensions and rising risk aversion.
The holiday period saw a roller-coaster ride for precious metals worldwide. Early in the break, escalating US-Iran conflicts triggered sharp corrections in gold and silver prices. However, a resurgence of safe-haven demand later in the week propelled international gold prices to a robust rebound. On February 23, gold and silver prices opened with sharp upward moves. Spot gold broke through $5,170, gaining over 1% intraday, while spot silver surged more than 3% to exceed $87.
Hong Kong-listed gold stocks had already reacted positively on February 23. TONGGUAN GOLD (00340.HK) surged over 11% during the session, CHINAGOLDINTL (02099.HK) rose nearly 7%, and ZIJIN GOLD INTL (02259.HK) advanced more than 7%.
With the A-share market set to reopen on February 24, the convergence of price gaps between domestic and international markets, coupled with ongoing geopolitical risks, is expected to be the key factor influencing domestic gold prices and related asset performances.
The rekindling of geopolitical concerns led to the initial decline and subsequent rally in precious metals. Nanhua Futures analysis indicated that early in the week, statements from Iran's foreign minister about reaching consensus on "guiding principles" for talks with the US caused international gold prices to retreat from highs, with silver following suit.
On February 17, international spot gold hit a low of $4,841 per ounce. Traders viewed this pullback primarily as a result of short-term profit-taking rather than a fundamental reversal of the underlying trend.
During the latter part of the holiday, precious metals quickly recovered losses and reached new highs. Renewed geopolitical tensions became the core driver pushing prices upward, with gold regaining favor as a traditional safe-haven asset.
Additionally, a February 20 US Supreme Court ruling against the Trump administration's large-scale tariff policies provided some support for metal prices, leading to renewed safe-haven inflows into gold.
CFTC data showed that as of the week ending February 17, speculators in COMEX gold increased their net long positions by 3,020 contracts to 96,057 contracts. Holdings in the SPDR Gold Trust, the world's largest gold ETF, reached 1,078.75 tonnes by February 20, a weekly increase of 1.72 tonnes.
From a technical perspective, strong buying support emerged for gold and silver at key support levels, with the rebound strength exceeding market expectations. This movement confirms the current market's core characteristic: any escalation in geopolitical risks quickly translates into allocation demand for precious metals. Concurrently, fluctuations in the US dollar index and changes in US Treasury yields provided additional supportive factors.
Beyond gold, platinum and palladium also posted significant gains during the holiday. NYMEX platinum and palladium showed strength with volatility. By February 20, NYMEX platinum main contract settled at $2,171.4 per ounce, up 5.02% from the February 13 close, while NYMEX palladium main contract settled at $1,786.5 per ounce, a 3.75% increase.
Xinhu Futures noted that overseas markets traded around US-Iran negotiations during the domestic holiday. Initially, the market adopted a cautious wait-and-see approach with risk aversion slightly dominant. Although the talks yielded no substantive results, expectations for continued negotiations, combined with weaker-than-expected US GDP growth and renewed rate cut expectations leading to a weaker dollar, collectively drove the metal price rebound.
Institutions are optimistic about catch-up potential. For the post-holiday domestic market, institutions generally predict a "gap-up opening" pattern. Shanghai gold futures closed at 1,100 yuan per gram before the holiday. With significant gains in overseas gold prices during the domestic market closure, a price gap of approximately 45-50 yuan per gram has formed between domestic and international markets, creating room for catch-up gains after the reopening.
Given the cumulative gains in international gold prices during the holiday, strong catch-up momentum is expected in domestic futures and spot markets. Post-holiday attention should focus on two key variables: the latest developments in geopolitical situations and marginal changes in Federal Reserve monetary policy expectations. If risk sentiment continues to build, gold may test higher resistance levels; conversely, substantive breakthroughs in negotiations would warrant caution against pullback risks.
Traders also caution that gold remains highly sensitive to risk pricing, with geopolitical conflicts and central bank gold purchases being core drivers. Investors need to closely monitor US-Iran negotiation progress and rationally view the divergence between short-term impulsive moves and medium-to-long-term trends.
From a medium-to-long-term perspective, foreign institutions maintain their bullish outlook on gold. Goldman Sachs' latest view indicates that persistent gold purchases by central banks, combined with increased allocations by private investors betting on Fed rate cuts, could push gold prices to $5,400 per ounce by the end of 2026, suggesting clear long-term upside potential. A February Bank of America global fund manager survey showed that "long gold" remained the most crowded trade for the second consecutive month, reflecting sustained institutional enthusiasm for gold asset allocation.
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