Gold and silver prices surged on Tuesday following a dramatic sell-off, with analysts indicating that the recent corrections were more about repositioning than an enduring decline.
Gold prices made a recovery after slipping on Monday and plunging nearly 10% on Friday — the sharpest single-day drop in many years. Silver also showed modest gains after a roughly 30% freefall that marked its steepest one-day loss since 1980.
Spot gold was last reported rising about 6% to $4,938.6 per ounce. Gold futures in New York were last seen gaining over 6%, stabilizing around $4,951 as of 3.26 a.m. ET.
Spot silver climbed nearly 10% to $86.96 per ounce. Silver futures in New York were up 13% at $87.23 per ounce.
This recovery occurred as investors reevaluated if the sell-off indicated a fundamental turning point or an exaggerated response to short-term factors.
Strategists at Deutsche Bank remarked that history implies it is typically short-term drivers, even as the extent of the sell-off has ignited new queries about market positioning. The bank noted that although signs of heightened speculative activity have persisted for months, they alone do not account for the scale of last week’s fluctuations.
“The shift in precious metal prices exceeded the weight of its apparent catalysts. Furthermore, intentions by investors in precious metals (official, institutional, individual) likely have not deteriorated.”
The sell-off was provoked by a blend of factors, such as a recovery in the U.S. dollar, changes in expectations around Federal Reserve leadership following President Donald Trump’s nomination of Kevin Warsh as the next Fed chair, and position-adjustments ahead of the weekend.
Deutsche Bank asserted that the overarching investment thesis for gold and silver remains robust.
“The thematic drivers for gold remain favorable, and we believe the motivation for investors to hold gold (and precious) allocations remains unchanged. The circumstances do not appear to be conducive to a long-term reversal in gold prices, and we wish to contrast today’s situation with the reasons for gold’s weakness in the 1980s and 2013.”
Barclays echoed a similar sentiment, recognizing overheated technical indicators and overstretched positioning, but emphasized that the broader “demand” for gold can continue to be strong amidst geopolitical and policy uncertainties and themes of reserve diversification.
Silver’s volatility has been more pronounced, reflecting its smaller market, greater volatility, and increased retail involvement. Yet, some analysts continue to advocate a bullish outlook for the white metal.
“Speculative positioning has undoubtedly impacted the short term. Silver has drawn more retail interest than gold, making it more susceptible to rapid shifts in sentiment and short-term trades,” stated Zavier Wong, market analyst at eToro.
Wong also remarked that it might be “too simplistic” to attribute the entire movement to speculation. Silver has real industrial demand, particularly associated with sectors related to data centers and AI infrastructure.
A study released in January predicted that global silver demand will surge this decade, primarily due to solar photovoltaics and the transition to more silver-intensive cell technologies. Total demand is anticipated to reach 48,000 tonnes to 54,000 tonnes annually by 2030, while supply is expected to rise only to around 34,000 tonnes, meaning merely 62%-70% of demand will be satisfied.
The solar sector alone is projected to consume 10,000-14,000 tonnes per year, accounting for up to 41% of global supply.
“That demand hasn’t disappeared. What we’re witnessing is silver moving ahead of itself, a pattern it has consistently displayed during strong phases,” remarked Wong.
