Global precious metal markets witnessed a strong recovery on Tuesday, February 3, following a period of intense volatility that saw prices plummeting to multi-month lows. 74 per ounce. This rebound marks a significant shift after a three-day downward spiral that had wiped out a substantial portion of the year's gains for both metals.
Context of the Recent Historic Market Slump
The current recovery follows a historic crash on January 30, when spot gold prices fell by nearly 10% in a single session. According to historical data, this was the sharpest one-day decline since 1983. The sell-off pushed gold below the critical psychological threshold of $5000 per ounce. Silver faced even harsher conditions, experiencing a 27% drop in one session, the largest single-day decline on record. Over the preceding two sessions, international gold prices had fallen by more than 13%, while silver had seen a correction of nearly 34%.
Impact of Federal Reserve and Regulatory Decisions
Market analysts attribute the recent price swings to a combination of geopolitical and regulatory factors. S. President Donald Trump nominated Kevin Warsh as the next Federal Reserve Chair. This move, coupled with the CME Group's decision to increase margin requirements for precious metals futures, led to a massive wave of profit-booking. The increased cost of holding positions forced many institutional players to liquidate, resulting in the sharp price correction seen last week.
Technical Correction from Record High Levels
82 per ounce during a prolonged rally. The subsequent drop to the $4700 level represented a massive $900 decline from the peak. According to market reports, the current 4% to 8% bounce is largely viewed as a technical correction and short-covering by traders. Analysts suggest that after such an extreme sell-off, the market often sees a 'relief rally' as buyers return to the market at lower price points, seeking value in the wake of the overextended decline.
Market Analysis and Current Outlook
According to market experts, while the recovery is significant, the precious metals market remains sensitive to upcoming economic data and central bank commentary. The breach of the $5000 level for gold remains a key focal point for technical analysts. 74 indicates a return of risk appetite, yet the underlying volatility remains high. S. fiscal policies on the global economy.