2026-02-02 14:13:37
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From Extreme Euphoria to Fragile Highs: The Prelude to the Precious Metals Surge
Prior to the end of January, gold and silver recorded sustained, strong gains, supported by a weak U.S. dollar, rising inflation expectations, and elevated global risk aversion. Gold surged to a historic high of $5,608 per ounce, while silver broke above $120 per ounce. Rapid price appreciation drove leverage and speculative sentiment sharply higher, making the market increasingly sensitive to changes in policy and liquidity conditions. These structural imbalances laid the groundwork for the subsequent dramatic correction.
A Hawkish Shock Reverses the Trend: Warsh’s Nomination Triggers Policy Repricing
On January 30, U.S. President Donald Trump nominated Kevin Warsh as the next Federal Reserve Chair. Known for his hawkish stance, Warsh’s nomination prompted markets to swiftly reassess the outlook for interest rates. The U.S. dollar strengthened, Treasury yields rose, and large volumes of profit?taking were unleashed in precious metals. Gold plunged to $4,800–$4,900, falling 11%–12% in a single day, while silver collapsed 25%–30%, marking its worst daily drop since the 1980s.
The Deeper Forces Behind the Market Turmoil: Leverage and Technical Breakdowns Trigger Cascading Liquidations
The downturn was driven by far more than policy repricing. Excessive leverage and concentrated speculative positions meant that once prices turned, automatic liquidation mechanisms in futures and options markets were quickly activated. The silver market, in particular, was heavily leveraged, and once key technical levels were breached, forced selling expanded exponentially. At the same time, algorithmic and quantitative strategies triggered synchronized stop?loss orders, further draining liquidity and accelerating the downward spiral.
Cross?Asset Contagion Intensifies the Sell?Off: Crypto Market Slump Forces Precious Metals Liquidation
The sharp decline in the cryptocurrency market played a pivotal role in the precious metals flash crash. On January 29, Bitcoin abruptly fell from $88,000 to $85,000, triggering more than $1.68 billion in forced liquidations. For institutions operating cross?asset portfolio?margin accounts, losses in crypto positions forced immediate liquidation of more liquid assets—namely gold and silver—to meet margin calls. Analysts estimate that 2%–3% of gold’s decline that day was unrelated to Federal Reserve policy but was purely collateral damage from crypto?induced forced selling.
Regulatory Tightening Further Compresses Liquidity: Margin Requirement Hikes Accelerate Deleveraging
Beginning mid?January, major global exchanges tightened margin requirements for precious metals. The CME raised margins on gold and silver by 10%–25%, while the Shanghai Gold Exchange increased requirements by as much as 41%. These adjustments left many leveraged accounts in a precarious position even before the sell?off began. When prices retreated, numerous positions were already near forced?liquidation thresholds, and the inability to provide additional funds triggered further margin?driven selling, intensifying market pressure.
Shockwaves Across the Financial Landscape: Over $15 Trillion Wiped Out in 24 Hours
With multiple layers of risk detonating simultaneously, the precious metals market lost more than $15 trillion in market value within 24 hours. Precious metals ETFs experienced historic outflows, and leading mining corporations—such as Newmont, Barrick, and AngloGold—saw their share prices plunge 10%–13%. This was not merely a commodity correction but a broad?based, system?wide risk event impacting futures, ETFs, spot markets, and mining equities.
Reflections After the Turbulence: Structural Bull Trend Intact, Long?Term Allocation Value Unchanged
Despite the sharp short?term correction, most institutions believe the long?term bullish foundation for precious metals remains intact. Gold still posted over 12% monthly gains in January, and global central banks continue to accumulate gold reserves, with projected 2026 purchases reaching 755 tons. Analysts widely view this episode as a cleansing of excess leverage—a necessary correction after an extreme rally—rather than a structural trend reversal. As short?term risks are digested, the strategic case for precious metals may become even more compelling at lower price levels.
Upway Global: At the Forefront of Gold Trading and Market Excellence
As one of the elite members of the Hong Kong Gold Exchange (HKGX) with AA operation status (Membership No. 084) and a core member of the Bullion Group, Upway Global was awarded the prestigious "Authorised Good Delivery Bars Minter" certification—the highest standard in refining and delivery of physical gold bars, confirming its capability to produce gold bars that meet international purity and quality standards. This recognition signifies Upway Global’s commitment to upholding industry-leading professionalism and integrity while reinforcing Hong Kong’s position as Asia’s global gold trading hub.
Demonstrating robust market strength, Upway Global’s daily transaction volume recently surpassed USD 80 billion, setting a record and underscoring its role as a market leader. With over 2.1 million active traders and a cumulative order volume exceeding 700 million, Upway Global continues to foster a trading ecosystem characterised by transparency, security, and efficiency. The company’s average monthly trading volume in 2025 exceeded USD 629 billion, making it the top performer on the HKGX platform.
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