Gold and silver prices slid sharply again on Monday. This extended last week’s dramatic reversal as a stronger US dollar, higher trading margins and widespread profit-taking drained momentum from a rally. That rally had recently pushed precious metals to record highs.
Spot gold dropped to an intraday low of $4,402 before recovering modestly, last trading down 3.7% at $4,687.52 an ounce. The metal had already plunged almost 10% on Friday. It broke back below the psychologically important $5,000 level after weeks of near-vertical gains.
Higher margins and stronger dollar intensify sell-off
Silver remained under even heavier pressure after its roughly 30% collapse late last week. Prices fell more than 12% at one point on Monday before stabilising near $79.20/z. This underscores the scale of the volatility now gripping the precious metals complex.
Market conditions further tightened after CME Group raised margin requirements in response to the surge in volatility. Margins on COMEX gold futures were increased to 8% from 6%. Meanwhile, silver margins were lifted to 15% from 11%. This effectively forced traders to post more capital to maintain positions.
The sell-off also followed a sharp repricing of interest-rate expectations and a rebound in the US dollar. This happened after Donald Trump nominated Kevin Warsh as the next Federal Reserve chair. That announcement triggered a broader unwinding of crowded trades across financial markets, with precious metals among the most heavily impacted.
Positioning stress, not fundamental shift
Despite the scale of the decline, several major banks argue the move reflects positioning stress. It does not reflect a deterioration in gold’s long-term fundamentals.
Michael Hsueh, analyst at Deutsche Bank, said the magnitude of the drop was disproportionate to the underlying catalysts.
‘The positioning adjustment and price movement in precious far outstripped the significance of its catalysts’, Hsueh wrote.
He added that conditions do not appear set for a sustained reversal in gold prices, stressing that the investment case for gold ‘has not likely changed for the worse’, and reiterated his long-term target of $6,000 an ounce.
Strategists at Barclays, led by Emmanuel Cau, also characterised the decline as a near-term reset after its recent rally. They said a pullback and repositioning looked warranted after gold became technically stretched and heavily owned. However, they cautioned against interpreting the move as the bursting of a bubble.
Instead, Barclays said the structural demand for gold remains intact, supported by central bank purchases, inflation dynamics and persistent policy uncertainty.
Bull market still intact
UBS echoed that view, describing the slump as ‘volatility within a continuing structural uptrend’ rather than the end of the bull market. Strategists led by Wayne Gordon noted that historically, gold bull markets tend to end only when central banks fully restore policy credibility.
UBS expects gold prices to trade in a $4,500 to $4,800 range in the near term before resuming their advance toward its mid-year forecast of $6,200/oz.
JPMorgan also upped its 2026 gold price forecast to $6,300/oz, citing ongoing strong demand from both central banks and investors, even after the recent bout of sharp price volatility.
While short-term risks remain elevated amid forced liquidation and tighter trading conditions, analysts broadly agree that the underlying drivers of the precious metals rally — including central bank demand, geopolitical uncertainty and longer-term inflation concerns — remain in place.
Markets will likely remain volatile as leveraged positions are unwound, and investors reassess interest-rate expectations. But most strategists see the latest sell-off as a violent correction within a broader uptrend, rather than a definitive end to the gold and silver bull market.
You might Also like:
