Key Points
- Gold prices fell 6% to around $5,000, while silver plunged 13%. The crash in metals coincided with a broader stock market sell-off.
- Analysts warn that high volatility and thinning liquidity have created a dangerous market.
- Gold had rallied past $5,500 earlier in the week due to a weak dollar and Fed policy.
- Silver dropped back to $99 per ounce after briefly topping $120.
Precious metals hit a brick wall on Friday, bringing a sudden stop to one of the most aggressive rallies in recent history. Gold prices dropped 6% to hover around $5,000 per ounce, while silver took an even harder hit, tumbling 13% in a single day. This sharp reversal happened alongside a broader sell-off in the stock market, where falling tech stocks dragged major averages into the red.
For weeks, investors have watched metals climb vertically, but experts are now warning that the party might be over. While there were solid reasons for the initial rally, he explained that deficits can shift very quickly when prices rise this fast.
Ole Hansen of Saxo Bank was even more blunt, calling the current market situation a “dangerous phase.” He warned that volatility is feeding on itself, making it harder to trade as liquidity dries up during these wild price swings.
Before Friday’s crash, gold was having a spectacular year, up roughly 15% since January began. Just last Wednesday, the metal soared past $5,500 after the Federal Reserve announced it would keep interest rates steady.
A weakening U.S. dollar had “super-charged” the trade, encouraging investors to dump cash in favor of hard assets. Goldman Sachs had even raised its year-end target to $5,400 earlier in the week, banking on continued buying from private investors.
Silver has been even more volatile. The metal had surged past $120 per ounce earlier in the week before crashing back down to around $99 on Friday. Despite the drop, silver is still up about 28% for the year.
Analysts at JPMorgan had previously admitted that silver prices had blown past their forecasts, noting that it is nearly impossible to predict the top when a market goes parabolic. Now, traders are left wondering if this is just a temporary dip or the beginning of a much larger correction.
