This week the gold and silver market crashed after gold was over $5,600 and silver broke through $121. From this point on in a "brutal" selloff.
The Crash's Anatomy
A series of factors converged on one another to produce the "buying frenzy" in mass exodus for a time:
Extreme Overbought Conditions: technical indicators such as the Relative Strength Index (RSI) had all hit levels greater than 87, indicating that metals were severely over-purchased.The analysts also agreed that a "bullion market reset" was inevitable since gold in January alone was higher than 20 percent and silver over 50%.
The ‘Warsh’ Factor
Speculation heated up that U.S. President Donald Trump would nominate Kevin Warsh as the next Fed Chair. Warsh is considered one of the hawks of monetary policy; his prospective stewardship raised fears that a “less dovish” Fed would drive the U.S. Dollar Index (DXY) into sharp swells.
Heavy Liquidation & Margin Call
As prices fell, automated stop-loss orders were placed; the force-selling response is caused by price moves. In addition, large equity exchanges increased margin requirements and pressured leveraged traders to sell their positions to pay their bills.
Removal of the Fear Premium
A bipartisan proposal to prevent the U.S. government from shutting down the economy made for a more favorable broad market mood. This helped diminish the immediate need for “safe-haven” assets and in turn investors began to rotate their capital to equities.
| Asset | Peak (Jan 29) | Low (Jan 30) | Approx. % Drop |
| Spot Gold | $5,626/oz | $4,895/oz | ~9% |
| Spot Silver | $121/oz | $83/oz | ~30% |
| MCX Gold (India) | ₹1,83,962 | ₹1,54,157 | ~9% |
| MCX Silver (India) | ₹4,20,048 | ₹3,32,002 | ~17% |
Expert Take: Is The Bull Run Past?
Despite the carnage, plenty of institutional analysts remain structurally bullish after all. Goldman Sachs raised its year-end forecast for 2026 ended at USD 5,400 recently, arguing that although the rally wasn’t direct, the forces central bank buying and geopolitical tension were intact. “What we were witnessing was a huge plunge over a short period with little apparent public motivation,” said one senior commodities strategist. “For patient investors, this correction is a mean reversion (a mean reversion), not a fundamental trend reversal.”
