On February 3rd, the first trading day of the week and the month, the precious metals market failed to sustain its earlier upward momentum, with both gold and silver declining during Monday's midday trading session in the US. Mhmarkets indicates that gold and silver prices are currently trading in the middle of the day's wide fluctuation range, having even touched four-week lows overnight; this sharp sell-off from high levels reflects that the panic selling following Friday's extreme market movements has not yet fully subsided. April gold futures were once quoted at $4,707.50, representing a single-day drop of nearly $40, while March silver prices also failed to hold onto previous highs, showing weak performance.
Multiple bearish factors from external markets are eroding the confidence of bulls. Mhmarkets believes that the strong rebound in the US dollar index, coupled with the recovery in US stock markets and the sharp decline in crude oil futures prices, collectively constitute external pressure on precious metals. In particular, changes in the proposed leadership appointments at the Federal Reserve have led markets to anticipate that future monetary policy could become more hawkish. March silver fell overnight to $71.20, a significant retreat from the historic high of $121.785 set last Thursday; April gold futures showed a similar pattern, rapidly falling from last week's historic peak to a low of $4,423.20.
The move by the Chicago Mercantile Exchange (CME) to increase margin requirements over the weekend undoubtedly accelerated this deleveraging process. Mhmarkets states that the margin hike forced some highly leveraged positions to be liquidated, while seasonal tightening of liquidity exacerbated the volatility. Concurrently, rumors of substantial losses incurred by some regional traders who failed to accurately assess leverage risks also reflect the extreme instability of market sentiment from another angle. The 10-year US Treasury yield is currently holding at 4.22%, further dampening the appeal of non-yielding assets.
From a technical chart perspective, the "key reversal" pattern formed by April gold futures last week is viewed by Mhmarkets as a significant signal of a market top for the current phase. The primary task for bulls now is to reclaim and stabilize above the $5,000 psychological关口, while bears are attempting to challenge the key support level around $4,250. The bullish momentum in silver is also fading, with short-term support having shifted down to the range between $70 and $75.
Overall, the current intense volatility is the result of the combined effects of previously excessive leverage and adjustments in policy expectations. Although the market faces pressure for a technical correction in the short term, this sell-off triggered by liquidity and leverage issues does not signify the end of the long-term cycle logic. Mhmarkets advises investors to closely monitor the psychological defensive strength around the major $5,000 integer关口 and to maintain prudence in position management to cope with the risk of a potential secondary decline.
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