Following the largest single-day drop in international gold prices in 40 years on January 30th, the international precious metals market continued its volatile trajectory during today's Asian trading session. Gold and silver prices extended their decline, although the intraday losses narrowed significantly compared to earlier trading, as market sentiment remains in a phase of deleveraging and risk repricing. An article from Lianhe Zaobao noted that over the past week, gold prices have experienced dramatic, rollercoaster-like swings, first hitting new highs before suffering their largest single-day decline since the 1980s. However, the metal still managed to register a 13% gain for the month of January. The expectation of a pullback among investors is attracting buying interest, leading many to view the current market volatility as a correction within a broader uptrend rather than the conclusion of the bull run. Huang Jinglong, a foreign exchange strategist at OCBC Bank, pointed out that the movement in gold prices "confirms the warning that a sharp spike is often followed by a steep fall." He indicated that the market had already accumulated pressure for an adjustment, stating, "It's as if the market was just waiting for an excuse to end the previous, almost parabolic, upward trend." Several interviewed experts expressed that with gold prices currently at elevated levels and volatility increasing, associated risks are also rising, necessitating greater caution from investors. Li Gang, Research Director at the China Institute for Foreign Investment Studies, analyzed that the rapid retreat in gold prices is primarily the result of a combination of sentiment and fundamental factors. He suggested this recent "plunge" resembles a swift correction of previously overheated market sentiment rather than a reversal of the medium to long-term upward trajectory. On the news front, amidst the sharp decline in gold and silver prices, the Chicago Mercantile Exchange (CME) announced on Friday an increase in the trading margin requirements for COMEX gold and silver futures. According to the statement, for non-high-risk accounts, the margin for gold futures will be raised from the current 6% of the contract value to 8%, while the margin for high-risk accounts will increase from 6.6% to 8.8%. For silver, the margin for non-high-risk accounts will rise from 11% to 15%, and for high-risk accounts, it will increase from 12.1% to 16.5%. Concurrently, the Industrial and Commercial Bank of China (ICBC) issued a risk advisory for the precious metals market, stating that prices for domestic and international precious metals have recently experienced violent fluctuations, leading to significantly heightened market uncertainty. The bank recommended that investors, based on a prudent assessment of their own risk tolerance, maintain a rational investment mindset and avoid blindly chasing rallies or panic selling.
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