On February 6, the precious metals market saw a sudden shift in sentiment. According to analysis, the significant decline in gold and silver prices on Thursday was primarily driven by profit-taking from long positions after a previous excessive rally. Although gold's drop was relatively moderate, settling around $4803.10, the extreme volatility in silver severely dampened market morale. This unstable condition indicates that the bargain-hunting funds from the beginning of the week are now facing a severe test.
In terms of the external environment, a strong rebound in the U.S. dollar index, coupled with weaker crude oil prices, created an unfavorable macroeconomic backdrop for precious metals, putting noticeable pressure on April futures contracts for gold and silver.
Looking at specific market performances, the March silver price fell by more than $8 in a single day to $76.25, with its volatility far exceeding that of gold. Data from Bloomberg showed that spot silver plummeted by 17% overnight, having lost more than a third of its value since the historical peak in late January. This sharp adjustment also spilled over into base metals, with copper prices falling below the key $13,000 level. At the same time, as President Trump nominated the hawkish Kevin Warsh to lead the Federal Reserve, the U.S. dollar index rebounded from a four-year low to a two-week high. This personnel change sent a tightening signal, further diminishing the appeal of precious metals.
A temporary easing of geopolitical risks also impacted commodity prices. With confirmed news that the U.S. and Iran will hold talks in Oman, the military strike premium in the crude oil market quickly faded. Analysis suggests that Brent crude falling toward $68 and WTI crude retreating to around $64 indirectly weakened gold's appeal as an inflation hedge. Although long-term regional disagreements persist, the short-term cooling of risk expectations has prompted funds to flow out of safe-haven assets and into U.S. Treasury bonds, which offer yields of approximately 4.2%.
From a technical perspective, gold futures formed a significant bearish reversal signal on the daily chart, indicating the possible establishment of a short-term peak. For bulls to reverse the downtrend, they would need to reclaim the key resistance level at $5250.00, while bears are closely watching an opportunity to retest this week's low of $4423.20. For silver, a bearish flag pattern has emerged on the daily chart. If prices break below the $70.00 mark, the correction could deepen further. Overall, the market is currently in a strong correction phase, and investors should remain cautious about the risk of a secondary downturn amid a strengthening U.S. dollar.