A sharp reversal in precious metals — gold prices plunge!

(New York, Jan 30)
Gold and silver prices swung wildly, surging to elevated levels before reversing sharply in a dramatic “roller-coaster” session that highlighted extreme market volatility.

Late Thursday (Jan 29), both metals extended strong gains: spot silver was up as much as 3.5% intraday, while spot gold rose around 2% at its peak. Near midnight, however, momentum flipped. Spot gold and silver sold off aggressively, with spot gold sliding through multiple key levels—$5,400, $5,300, and $5,200—before recovering part of the losses in the morning.

As of 11:00 a.m. Malaysia time, spot gold stood at $5,218.23 per ounce, down $87.02 or 1.64%, while spot silver was at $111.16 per ounce, down $2.26 or 1.99%. Meanwhile, LME three-month copper also spiked—up as much as 10.32%—before retreating, later clawing back some losses to trade around $13,618 per tonne.

Profit-taking drives the sudden drop

Market participants attributed the sharp pullback to profit-taking after repeated record highs. Spot gold had risen for eight straight sessions, with monthly gains exceeding 23%.

David Meger, head of metals trading at High Ridge Futures, said heavy selling emerged after precious metals recently pushed to fresh all-time highs.

Simon Biddle, head of precious metals at Tullett Prebon (TP ICAP Group), added that the size and persistence of the rally may be limiting banks’ ability to hold positions, reducing liquidity and amplifying volatility. With balance sheets not unlimited, banks have cut risk exposure and overall trading volume has declined, he noted.

China Guoxin Futures expects precious metals to remain range-bound but biased higher overall, while warning that high absolute prices and regulatory constraints could materially increase volatility.

US shutdown risk adds to safe-haven demand

On the news front, the possibility of another U.S. government shutdown has reinforced safe-haven sentiment. Chinese media reported that on Thursday (Jan 29), the U.S. Senate failed to pass a government funding bill, raising the risk of a partial shutdown at month-end if funding runs out.

In addition, President Donald Trump signed an executive order declaring a national emergency and threatened ad valorem tariffs on imports from countries that supply oil to Cuba.

Long-term outlook remains constructive

Arun Sai, senior multi-asset strategist at Pictet Asset Management, said gold should continue to benefit from concerns over currency debasement and the “weaponization” of finance. As strategic and economic alliances shift rapidly and uncertainty grows, both emerging-market central banks and private investors increasingly view gold as a reliable store of value.

He argued that when inflation and policy risks dominate, gold can serve as a uniquely effective diversification tool. Even if a tactical pullback follows the recent rally—especially if the Fed turns more hawkish—he would treat it as an opportunity to add to long-term structural allocations.