On Thursday, US stocks experienced a significant decline, with the Nasdaq falling over 2%. Some traders sold precious metals to cover losses in the equity market, leading to sharp drops in gold, silver, and copper, while platinum and palladium also moved lower. The US Dollar Index saw a modest increase.
Amid renewed concerns over whether massive artificial intelligence investments can be successfully implemented on a large scale, US technology stocks declined. Metal prices suddenly fell under suspected algorithmic trading selling, forcing some investors to exit commodity positions, including metals, to secure liquidity. Some capital also shifted toward US Treasury bonds for safety.
Spot gold fell by as much as 4.1%, while silver plummeted 11%. Copper prices on the London Metal Exchange dropped 2.9%. Metal prices later pared some of their losses.
By the New York close on Thursday, spot gold was down 3.26% at $4,918.36 per ounce. Before 00:00 Beijing time, it had maintained a slight decline, largely holding above $5,050, before a sharp sell-off pushed it to a daily low of $4,878.66. COMEX gold futures declined 3.06% to $4,942.50 per ounce.
What do analysts say? Regarding Thursday's movement in gold and silver, industry insiders noted, "Everything happened too quickly—it felt like a risk-off event. During periods of extreme market stress, even safe-haven assets like gold can be sold by investors urgently needing liquidity."
Part of the selling in gold and silver also stemmed from profit-taking, as the previous rapid rally had been partly driven by speculative buying.
Some industry experts pointed out that, to a large extent, trading in gold and silver remains driven by sentiment and momentum. On days like this, they tend to struggle.
Since the beginning of 2024, gold and silver had rallied strongly, with momentum-driven buying pushing metal prices to repeated new highs. However, this trend came to an abrupt halt on January 29, when gold recorded its largest single-day drop in over a decade, and silver saw its biggest decline on record. Since then, both metals have traded within a narrow range with increased volatility, lacking new catalysts.
Some analysts believe that Thursday's sudden decline in gold does not necessarily signal the start of a sustained downtrend. However, it does raise the likelihood of continued volatility in the near term. The market has cleared a significant portion of lower liquidity zones, and the next move will depend on how prices behave near key technical levels.
Media analysis suggests that despite a minor rebound, metals were broadly hit by a sudden decline resembling a "vacuum sell-off," more indicative of systematic strategy selling—such as momentum-driven de-risking by CTA (Commodity Trading Advisor) groups when key price levels are breached.
Despite recent sharp losses, many analysts still expect gold to resume its upward trend, citing factors that previously drove the rally—including geopolitical tensions, questions about Federal Reserve independence, and a broader shift away from traditional assets like currencies and sovereign bonds. J.P. Morgan Private Bank forecasts year-end gold prices reaching $6,000 to $6,300 per ounce, while Deutsche Bank and Goldman Sachs maintain bullish outlooks.
Heavy trading was observed in May/June $125 strike call options for the iShares Silver Trust, the world's largest silver ETF. At the same time, investors sold contracts previously bought at higher levels, which may have further intensified selling pressure on silver.
Traders are now focused on US economic data, including key CPI figures scheduled for release on Friday, for clues on the Federal Reserve's interest rate path. Lower borrowing costs typically benefit precious metals, which do not offer interest earnings.