Precious metals staged a partial recovery in early February 2026 after a week of violent swings that culminated in one of the most dramatic single‑day sell‑offs in decades. By 08:22 Beijing time on Feb. 3, spot gold had rebounded to about $4,809 an ounce, up more than 3% on the day, while silver climbed back to roughly $83.81, a gain of over 5% from the session’s open.
The rebound follows a harsh repricing that began late January and intensified on Feb. 2. On Jan. 31 spot gold plunged as much as 12% intraday to a low near $4,682 an ounce, and silver suffered a record one‑day drop, tumbling more than 36% to about $74.28. On Feb. 2, metals briefly recovered and then plunged again: gold fell below $4,450 and hit an intraday trough around $4,421, while silver slid toward $72 an ounce — near the level that all but erased its gains for 2026.
Market participants and analysts point to two linked forces behind the chaos: a rapid unwind of leveraged positions and a sudden shift in expectations for US monetary policy. Capital.com senior analyst Kyle Rodda described the episode as classic deleveraging — heavy positions and leverage amplified selling and propagated losses into other commodity markets, including oil and base metals. By Feb. 2, WTI crude was down more than 6% intraday and copper, palladium and platinum also registered multi‑percent declines.
The nomination of former Fed governor Kevin Warsh to be the next Federal Reserve chair by US President Donald Trump on Jan. 30 reinforced expectations of a stronger, more hawkish Fed. Several broker reports and institutional notes argued that Warsh’s preference for low inflation and dollar strength would be a headwind for dollar‑priced safe havens in the near term, making gold and silver vulnerable to price drops when liquidity tightened.
Chinese state banks and retail channels reacted swiftly. Since late January, major state banks issued multiple risk alerts, raised collateral and trading margins on precious‑metals products, and in some cases imposed daily limits on new accumulations and redemptions. Industrial and Commercial Bank of China (ICBC) and Construction Bank implemented higher thresholds and risk prompts for personal gold savings and deferred contracts, advising customers to adopt staggered, medium‑ to long‑term approaches.
That regulatory‑market feedback loop — margin increases constraining leveraged positions, retail risk warnings discouraging fresh inflows — helped blunt some speculative pressure but also reduced liquidity, a dynamic that exacerbated earlier price moves. At the same time, long‑term structural demand for gold remains robust: central banks continued to add to reserves and private demand in 2025 pushed global gold demand above historic levels, according to the World Gold Council’s recent data.
The near‑term outlook is dominated by two competing vectors. On one hand, a stronger dollar and the prospect of tighter US monetary policy are clear headwinds for precious metals and can trigger episodic liquidations when leverage is high. On the other hand, longer‑term drivers — geopolitical uncertainty, fiscal strains, and sustained central‑bank buying — continue to support strategic allocations to gold as a monetary‑like asset. For now, market participants and regulators are focused on liquidity management and haircut policies to prevent a repeat of the intraday freefalls that shook markets in late January and early February.