Precious metals are experiencing violent fluctuations! Following significant volatility last night, the prices of gold and silver continued their sharp decline today. During the session, spot gold fell by more than 6% at one point, while spot silver plummeted by over 10%. Some analysis suggests the plunge in precious metals is related to investors taking profits after this year's record-breaking rally, while also being weighed down by a rebound in the US dollar. Furthermore, news that Kevin Warsh might be nominated by Trump as the next Federal Reserve Chair has also pressured gold and silver prices. Warsh has long been critical of ultra-loose monetary policy, so the market may be pricing in the implications of his potential appointment for the future policy path. On Friday, A-share gold concept stocks collectively fell. By the market close, over 20 related concept stocks, including Zhongjin Gold, Shandong Gold Mining Co., Ltd., Sichuan Gold Co., Ltd., and Hunan Silver, hit the daily downside limit. However, UBS recently stated that while gold prices may face pressure in the short term, the long-term outlook remains optimistic. The bank raised its gold price targets for March, June, and September 2026 from $5,000 per ounce to $6,200 per ounce, citing stronger-than-expected demand due to increased investment.

Gold and silver prices collectively experienced a major plunge. During the session on January 30, after briefly surging higher, gold and silver prices went into a straight-line nosedive. Spot gold fell to a low of $5,051 per ounce, with an intraday decline exceeding 6% at one point; spot silver dropped to a low of $103 per ounce, with an intraday plunge of over 10%. At the time of writing, spot gold was quoted at $5,099.92 per ounce, down 5.16%; spot silver fell 10.08% to $104.19 per ounce. A recent report from Nikolaos Panigirtzoglou, a Global Market Strategist at J.P. Morgan, predicts that gold prices could rise to between $8,000 and $8,500 per ounce in the coming years, partly because retail investors are increasingly relying on gold rather than fixed-income products to hedge against the risk of a US stock market decline. However, Panigirtzoglou warned that Commodity Trading Advisors (CTAs) and momentum traders are currently holding extremely overbought positions in both silver and gold, meaning there is a risk of profit-taking or mean reversion for gold and silver in the short term.

Analysts stated that gold and silver prices declined due to market expectations that Kevin Warsh would be nominated by US President Trump as the next Federal Reserve Chair. Analysts at Maybank, in their *Foreign Exchange Research & Strategy* report, said that rumors of Warsh's appointment as the next Fed chair caused gold and silver to pull back. "Warsh has long been critical of ultra-loose monetary policy and is a former Fed Governor, so the market may be pricing in the implications of his potential appointment for the future policy path," the analysts added. Financial markets perceive Warsh as having less willingness to cut interest rates compared to another top candidate, Kevin Hassett, Director of the National Economic Council. Market analysts pointed out that the selection of Warsh, a more 'hawkish' candidate, has sparked concerns in financial markets that interest rates might not fall to the low levels potentially seen under a Hassett tenure. The anticipation of future Fed rates being higher than previously expected propelled the US dollar higher and weighed on the Australian dollar, subsequently pushing precious metal prices lower. Gold and silver prices typically move inversely to the value of the US dollar.

The head of commodity strategy at Saxo Bank said, "I believe the sustained explosive rally in the metals market, especially gold and silver, is entering a dangerous phase." He pointed out that the problem lies in self-reinforcing volatility, where liquidity thins as price swings intensify. Ed Yardeni, President of Yardeni Research, stated, "In a bull market, it's normal for the gold price to correct to $5,000 per ounce and consolidate around that level. What's surprising is that gold rose from $3,000 to $5,500 per ounce without any significant correction along the way... So far, the precious metals market has exhibited more of a 'melt-up' phenomenon than a traditional bull market." Strategists at OCBC Bank said, "Gold's movement confirms the warning that 'a sharp rise inevitably leads to a sharp fall.' While the news of Warsh's nomination was the trigger, a correction was long overdue; it's as if the market was just waiting for an excuse to temper the parabolic rise."

UBS Raises Gold Price Target to $6,200/Ounce Despite the recent pullback, gold is still up nearly 20% year-to-date, primarily supported by the Trump administration's disruption of the international order and its criticism of the Federal Reserve's independence. Trump's threats to strike Iran and his declaration of tariffs on any country supplying oil to Cuba keep tensions elevated. Furthermore, a series of tariff threats by Trump against Europe, Canada, and South Korea have also impacted markets. Concurrently, Trump reached a preliminary deal with Senate Democrats, averting the immediate risk of another US government shutdown. The White House continues negotiations with Democrats to set new limits on immigration raids that have sparked nationwide protests. Notably, amidst the severe price volatility, UBS significantly raised its gold price target. In a report on Thursday, the bank raised its gold price targets for March, June, and September 2026 from $5,000 per ounce to $6,200 per ounce, citing stronger-than-expected demand due to increased investment. However, the bank also noted that after the US mid-term elections, the gold price could see a slight decline to $5,900 per ounce by the end of 2026. Meanwhile, UBS set a bull-case scenario target for gold at $7,200 per ounce and a bear-case scenario target at $4,600 per ounce. The bank indicated that a hawkish stance from the Fed could exacerbate the risk of gold price declines, while escalating geopolitical tensions could push prices higher.

On Tuesday, Deutsche Bank stated that, driven by sustained investment demand, gold prices could climb to $6,000 per ounce by 2026 as central banks and investors increase their allocations to non-US dollar and physical assets. Analysts at Société Générale also expect gold prices to reach $6,000 per ounce by the end of this year, suggesting their forecast might be conservative and that there is still room for further gains. This latest round of forecast upgrades and reiterations comes as spot gold hit a record high of $5,594.82 per ounce on Thursday. The safe-haven metal has gained nearly 20% so far in January, poised for a sixth consecutive monthly gain and marking its largest single-month increase since 1980. The World Gold Council's full-year *Global Gold Demand Trends Report* for 2025, released on January 29, showed that global gold demand reached a record high of 5,002 tonnes in 2025. Persistent geopolitical and global economic uncertainties drove a significant surge in gold investment demand, pushing the total value of annual gold demand to $555 billion. Global gold investment demand rose to a milestone 2,175 tonnes, becoming the main driver behind the record annual total. Globally, investors seeking safety and diversification poured into gold ETFs, resulting in a net annual increase of 801 tonnes. Simultaneously, physical gold investment demand remained robust, with global bar and coin demand reaching 1,374 tonnes, valued at $154 billion. Due to repeatedly hitting new price highs, global jewellery demand softened in 2025, with volume down 18% compared to 2024, but the consumption value grew 18% year-on-year to $172 billion, highlighting the enduring appeal of gold jewellery to consumers.