The domestic commodity market suffered a rare and severe setback, impacted by a sharp plunge in international precious metals from their highs. On February 2nd, the domestic futures market opened sharply lower across the board, with panic sentiment spreading continuously during the session. From precious metals to non-ferrous metals and then to energy and chemical products, multiple varieties successively hit their daily limit-down prices. By the close, 13 varieties, including Shanghai silver, platinum, palladium, Shanghai copper, Shanghai aluminum, Shanghai nickel, Shanghai tin, aluminum alloy, lithium carbonate, international copper, stainless steel, crude oil, and fuel oil, collectively hit limit-down, marking a "Black Monday" for the market. Multiple industry insiders indicated that this round of sharp decline was not caused by a single fundamental factor, but rather a concentrated release following excessive previous gains, highly concentrated leveraged funds, and an extremely fragile trading structure. Amidst news-driven disturbances, a stampede by long positions quickly formed and was significantly amplified by program trading and derivatives mechanisms. More than ten varieties collectively hit limit-down. Looking back at the market movement, a violent reversal had already begun in the international precious metals market on Friday evening. On that day, spot gold saw an intraday maximum decline of up to 12%, setting a rare record for a single-day drop in nearly forty years; spot silver experienced an "epic flash crash," with an intraday plunge of up to 36%, the largest single-day drop since 1983. The sharp decline in precious metals quickly transmitted to the global commodity market. On February 2nd, global markets entered a "Black Monday." Spot gold continued its decline, successively breaking through the $4800, $4700, $4600, and $4500 thresholds, hitting a low of $4401; spot silver fell from around $80, dropping to a low of $71.17. Influenced by the heavy losses in overseas markets, the domestic futures market opened significantly lower in the morning session. Precious metals such as silver, platinum, and palladium were the first to be locked at their limit-down prices, followed quickly by declines in non-ferrous metals and some energy and chemical products. In the afternoon, market panic intensified significantly, and the number of limit-downs rapidly expanded. By the close, 13 varieties including Shanghai silver, platinum, palladium, Shanghai copper, Shanghai aluminum, Shanghai nickel, Shanghai tin, aluminum alloy, lithium carbonate, international copper, stainless steel, crude oil, and fuel oil had collectively hit their daily limit-down. Among them, the main Shanghai gold futures contract once touched its limit-down, hitting a low of 1005.4 yuan per gram. It later opened from the limit-down but still closed down 15.73%, marking the largest decline since the contract's listing. Consequently, for varieties like gold, silver, and copper, the gains accumulated over the past month were erased within just two trading sessions, a testament to the exceptionally violent volatility. Nanhua Futures analyst Xia Yingying pointed out that the sharp fluctuations in precious metals prices in this round have clearly exceeded the scope explainable by fundamentals, with sentiment factors becoming the dominant force. "Previously, long positions were excessively crowded. Under the impact of sudden news, a negative feedback mechanism was rapidly activated, leading to a concentrated release of technical selling pressure, ultimately forming a stampede-like decline." Long squeeze; leverage and derivatives amplify volatility. A violent market reversal often stems from a previously seemingly unshakeable upward logic. In January of this year, the precious metals market continued to heat up. The price of gold surged from around $4300 per ounce to $5600, a single-month increase of 28%; the rise in silver was even more aggressive, climbing rapidly from around $70 to above $120, with a maximum gain approaching 70%. The暴涨 in precious metals quickly spread to non-ferrous metals and related industrial chains. Varieties such as copper, aluminum, nickel, and lithium carbonate strengthened successively. Mining and resource stocks frequently hit their daily limit-up in the capital markets, sustaining a highly亢奋 market sentiment. The CME noted in its latest market weekly report that after hitting record highs last week, gold, silver, and copper retreated rapidly, indicating that speculative sentiment had been pushed to extreme levels. As news fermented regarding US President Trump's nomination of former Federal Reserve Governor Kevin Warsh as a candidate for the new Fed Chair, market concerns about his past hawkish policy stance intensified, leading to signs of loosening in both commodities and stock markets. Against a backdrop of clear technical overbought conditions, the metals market ultimately evolved into a long squeeze. SDIC Futures believes that Warsh's nomination was more of a trigger; the real risk lies in the structural vulnerability accumulated from the previous excessive gains. "The long-term narrative of the US dollar credit crisis and the reshaping of the global order has not fundamentally reversed. After the sharp decline, precious metals may enter a phase of high volatility, waiting for volatility to subside before seeking trading opportunities again." Several institutional sources pointed out that a notable feature of this market movement is the synchronous amplifying effect of high-leverage funds and derivative instruments in both the upward and downward directions. Chanlong Asset Management analysis suggests that before the暴跌 occurred, multiple technical indicators for gold and silver were severely overbought, and market sentiment indicators had climbed to multi-decade highs. The influx of a large amount of highly leveraged funds pushed market density to its limits, resulting in a highly fragile market structure. "Under the collective consensus of bullish expectations, call options, with their characteristic of potentially huge returns from minimal principal, became a significant amplifier of speculative sentiment. However, when prices move in the opposite direction, options, margin trading, and programmatic strategies jointly trigger stop-loss and rebalancing mechanisms. Liquidity rapidly dries up, subsequently triggering a stampede," Chanlong Asset Management stated. Wu Weizhi, Chairman of Zhongou Ruibo, pointed out that in this round of commodity price surges and plunges, the volatility of silver has been particularly severe. Falling from an intraday high of $118.45 per ounce to a low of $74, a maximum drop of 37.53%, it is a typical result of multi-factor resonance. "On one hand, the accelerated rise since the beginning of the year accumulated a large amount of unrealized profits; on the other hand, the rebalancing mechanism of leveraged ETF products, which passively increase positions during rises and decrease positions during falls, coupled with the massive scale of CTA program trading, means that once the direction reverses, it is difficult to find sufficient counterparties in a short time. A liquidity vacuum rapidly amplifies the volatility," Wu Weizhi stated. Exchanges intensively intervene to stabilize the market. Facing the extreme market conditions, domestic and international exchanges quickly adopted risk control measures. On February 1st, the Shanghai Gold Exchange announced that it would dynamically adjust the trading margin levels and daily price fluctuation limits for silver deferred settlement contracts. If the Ag(T+D) contract experienced a one-sided market on February 2nd, the margin requirement would be increased from 20% to 26%, and the daily price limit would be expanded from 19% to 25% starting from the next trading day. On January 30th, the CME also announced an increase in margin requirements for COMEX gold, silver, and other precious metal futures contracts, effective after the close on February 2nd. Among these, the margin requirement for gold futures for non-high-risk accounts was raised from 6% to 8%, and for silver futures from 11% to 15%. On the same day, the Shanghai Futures Exchange issued a notice stating that, starting from the settlement after the close on February 3rd, it would increase the daily price limits and trading margin ratios for several silver futures contracts to mitigate short-term risks. Industry insiders believe that this violent fluctuation in commodities holds significant warning implications for the capital markets. Chanlong Asset Management pointed out that when an asset or sector becomes overly narrativized, with prices dictated by sentiment and leverage, irrational exuberance is often accompanied by systemic risk. "This is also why, during phases of significant volume-driven rises in certain markets, broad-based ETFs actually experience continuous outflows. Regulators need to use counter-cyclical adjustment mechanisms to cool the market and push it back towards rationality." Wu Weizhi also commented that although silver and gold are globally priced commodities, it is difficult for Chinese regulators to prevent overseas institutions from creating various leveraged ETF products. However, it is worth considering that if the scale of similar strategy products expands without limits, there will inevitably be a stage during the uptrend where net asset value increases → the赚钱 effect attracts more capital inflows → incremental funds, after subscription, continue the original strategy → product net asset value continues to rise → attracting further new capital. Multiple interviewees emphasized that the massive shock in precious metals this round does not signify the end of the long-term logic. However, in the short term, deleveraging and reducing crowded trades remain processes the market needs to complete. Against the backdrop of significantly elevated volatility, investors need to pay more attention to risk control and liquidity constraints to avoid being passively caught in a stampede during emotional market swings. After the "Black Monday," the market is reassessing risks and pricing. Finding a new equilibrium amidst the剧烈波动 will become a crucial issue for the global commodity market in the coming period.
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