GOLD and silver prices have plummeted today with experts warning of “further volatility” to come.
Gold has fallen off a cliff from highs of over $5,500 per ounce on Thursday to around $5,050 today.
Silver prices have also gone down from highs of over $120 per ounce on Thursday to around $100 today.
Gold had doubled in price in a year after a “perfect storm” of geopolitical tension, including Donald Trump’s claims over Greenland, regime change in Venezuela, strikes in Iran and continued conflict in Ukraine.
Silver had quadrupled in price in a year due to industrial demand, specifically from the AI, solar, and EV sectors are driving demand – as well as the same geopolitical pressures.
But now prices of both metals have fallen off a cliff with experts saying it is due to Donald Trump choosing the Federal Reserve Chair nominee of Kevin Warsh, shortages of physical gold and silver and fund managers selling off their stocks.
Prices remain historically high
Jim Tannahill, Managing Director at London-based Suttons and Robertsons, said he was not surprised by the drop.
He added: “The recent pullback follows a powerful run. Moves like this are a normal part of how precious-metal markets behave after periods of rapid growth. Prices remain historically high, and short-term volatility does not change the longer-term fundamentals and central bank buying and investor demand remain strong, although geopolitical tensions will likely see continued uncertainty.
“After such strong gains we’d expect prices to continue to rise more modestly into 2026. For our customers, it is very much business as usual, we’re seeing a lot of demand for both borrowing against, and selling gold and silver. If the customer sentiment feels the prices will slip further, we anticipate we’ll see more people taking action.”
Phil Ingle, Managing Director at Phil Ingle Associates, said we should expect “further volatility”.
He added: “This is a sign of more volatility in gold and silver. The central banks are largely quiet in gold right now, so with more institutional involvement, the price has got a little frothy.
“There is also a connection with the value of the Dollar and the expectation of a further decline in that. Remember that it was only a short while since gold passed the $5,000 mark: a correction is not surprising. Expect further volatility.”
Corrections were always likely
Anita Wright, Chartered Financial Planner at Ribble Wealth Management, urged investors to hold tight.
She added: “The naysayers are crowing, saying gold and silver have peaked. This week’s market swings were certainly unsettling, and a stark reminder of how quickly traders can get caught on the wrong side of rapid moves.
“Commentary in mainstream and social media overwhelmingly opines that gold and silver are too high, have topped out, are wildly overbought, and by implication will now decline significantly at least wiping out much of the explosive rise of recent weeks. However, shortages of physical are reported, with silver being drained from Shanghai Gold Exchange vaults and banks reportedly restricting withdrawals of gold bars from gold accumulation accounts.
“Hoarders should not be influenced by down days and keep in mind the reason they hold physical gold and silver, noting that they are in very short supply relative to demand in the markets which really matters — China, India, and other Asian centres.”
Riz Malik, Director at Southend-on-Sea-based R3 Wealth, said the drop was due to Trump’s nomination for the Federal Reserve.
He continued: “The drop in precious metals has much to do with Trump’s nomination to pick Warsh to replace Jerome Powell and outlook on future rate cuts than anything else.
“Although the precious metals are still up on the year, silver has taken a big hit. Corrections were always likely, and the only way is not just up. Volatility exists in commodities as it does in other asset classes.”
Uncertainty is the name of the game
Samuel Mather-Holgate, Managing Director & IFA at Swindon-based Mather and Murray Financial, said he expects gold and silver to re-rally.
He added: “Precious metals have been at all time highs and with Donald Trump quiet for a couple of days, investors are taking their profits.
“With unpredictability in geopolitics at unprecedented levels, gold and silver could re-rally and surpass their peaks, but uncertainty is the name of the game here.”
Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said the price was due to sell-offs.
He continued: “The sharp retreat from Thursday’s highs for gold and silver is a classic display of ‘month-end rebalancing’ amplified by extreme volatility. Because these metals surged so aggressively in January, they now exceed the risk-weighting limits for many institutional portfolios.
“Fund managers are mechanically forced to sell their ‘winners’ to return to their target allocations, creating massive sell-side pressure on the final trading day. This technical flush is compounded by ‘window dressing,’ where hedge funds lock in realized profits to bolster January performance reports. While the potential for a more hawkish Federal Reserve provided the initial spark for the sell-off, the magnitude of the drop is primarily due to this institutional book-balancing.
“Historically, these corrections are viewed as healthy ‘breathers’ that shake out speculative leverage. Rather than a total market peak, today likely represents a transition from a vertical ‘hype’ phase to a more sustainable support level.”
