MW Gold now down nearly $1,000 from peak as silver extends losses after a record 31% one-day slump
By Myra P. Saefong and Barbara Kollmeyer
Gold has gone from 'euphoric highs to brutal reality check'
Precious metals settled lower Monday after last week's historic rout.
Gold and silver failed on Monday to recover lost ground after a selloff Friday in precious metals that saw gold fall significantly from record highs and silver post its biggest daily loss in 46 years.
Prices for gold, in particular, went from "euphoric highs to brutal reality check" last week, said Fawad Razaqzada, global macroeconomics market analyst at Forex.com.
Key drivers for gold have started to "fade," he said, with one of the biggest bullish themes - concerns about U.S. monetary-policy credibility - shifting "abruptly" after President Donald Trump nominated Kevin Warsh to be the next Federal Reserve chair.
That led to strength in the U.S. dollar DXY, which pressured dollar-denominated prices of the precious metal - contributing to a more than 30% drop in silver futures (SI00) from their recent settlement high, well into bear-market territory, which is defined as a drop of 20% or more from recent highs. Gold (GC00) still has a ways to go to reach bear-market territory, ending Monday down about 13% from a record high close last week, FactSet data show.
On Monday, the most-active March silver contract (SIH26) dropped over 9% from Friday's settlement at one point in early trading, spent time trading higher, then settled with a loss of 1.9% at $77.01 an ounce. Friday's slump of 31% to $78.53 an ounce on Comex marked its biggest one-day percentage drop since March 27, 1980.
Gold for April delivery (GCJ26) pared a more than 6% drop from Friday's finish to a nearly 2% decline, settling at $4,652.60 an ounce Monday after ending 11% lower on Friday. Last Thursday, most-active gold futures tapped an intraday high of $5,626.80 an ounce, and the precious metal is now down more than $974 from that.
That marks a dramatic shift from record highs for both gold and silver in recent weeks.
What made Friday's move particularly notable was the sheer scale of the selloff for gold, Razaqzada said in market commentary. "When markets move like this, I don't think any sane investors will be willing to hold their positions for too long in hoping to catch the next up leg."
On Friday, most-active gold prices fell by more than 11% to mark their biggest one-day decline on record, while silver dropped by over 31% to suffer its largest daily drop since 1980, according to Dow Jones Market Data.
Read: Silver suffers biggest drop in 46 years, with 'every man and his dog rushing for the exit'
While some analysts blamed the selloff in precious metals late last week on strength in the U.S. dollar following Trump's nomination of Warsh, "it's not the fear of a potential withdrawal of liquidity should Warsh succeed in shrinking the Fed's balance sheet," said Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions.
The spectacular declines in gold and silver also are not a function of a fundamental repricing of the outlook, or of confidence in the dollar or any other fun narratives, he said.
"It's simply the aftermath of a technically driven crowded momentum trade," said Melson, noting that gold and silver have seen their pricing charts "turn parabolic over the past few weeks," which led to an "extreme momentum trade."
Opinion: Here's the real reason gold prices plunged - and why the selloff likely isn't over yet
Elsewhere, copper for March delivery (HGH26) (HG00) lost 1.7% to $5.83 a pound, after a 4.5% drop on Friday. Platinum futures (PL00) fell 0.8% to $2,104.10 an ounce after a 19% slump on Friday, and palladium (PA00) edged up by 0.1% at $1,705 an ounce, after a 16% tumble Friday.
Traders continue to unwind what had become "an extremely crowded, one-sided trade," Ole Hansen, head of commodity at Saxo Bank, in a Monday post on X.
"Silver in particular had, for months, drawn in investors, professionals and retail participants alike, before the move turned parabolic and increasingly unhinged," said Hansen, who added that too many traders and investors then tried to exit at once on Friday.
The initial trigger for that selloff was a dollar DXY rebound surrounding the nomination of Warsh. However, the "depth of the slump was driven by a cascade of futures selling linked to the unwinding of ETF and options positions," Hansen said.
Meanwhile, changes to CME $(CME)$ margins are likely to have played their part in market liquidation, said Rhona O'Connell, head of market analysis for EMEA and Asia at StoneX.
On Friday, CME announced increases to gold and silver margin requirements, which are defined as the initial percentage of a contract value a trader deposits to hold a leveraged position in futures contracts.
The margin requirement for one-ounce gold futures rose to 8% of the underlying contract, up from 6%, as of the close of business Monday, while margins for 5,000-ounce silver futures climbed to 15% from 11%, according to CME.
This latest move in precious metals is "obviously vicious and painful, but standing back and taking a longer-term view, it is shaking out a lot of the recent market noise and will hopefully lead to more cautious tones in the near future," StoneX's O'Connell said in a market note.
Read: Buy into gold's weakness, say JPMorgan and Deutsche Bank
-Myra P. Saefong -Barbara Kollmeyer
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(END) Dow Jones Newswires
February 02, 2026 15:36 ET (20:36 GMT)
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