Gold and silver were sharply lower again on Monday as dollar strength and concerns about over-buying through derivatives and ETFs sent the precious metals lower for a second straight session.
Gold sank as low as $4,422 in the early hours of Monday’s session, having traded above $5,600 at the end of last week. Silver was down 7% on Monday.
After an astronomical run higher over the past three months, volatility may provide the entry point that investors who missed the recent rally have been waiting for, with analysts suggesting the longer-term view is little changed.
“Gold fell nearly 20% from its peak in two sessions, while silver erased all year-to-date gains, including a historic 16% intraday decline. The selloff reflects an unwind of crowded positioning, not a shift in fundamentals,” said Lale Akoner, global market analyst at eToro.
“The rally had become over-owned through bullion ETFs, leveraged futures and call-option structures that mechanically amplified upside. News that Kevin Warsh could be nominated as Fed Chair strengthened the dollar and shifted policy expectations, triggering forced selling as liquidity thinned.”
Akoner continued to support the view that the downside could be short-lived, given the underlying buying pressures that have sent precious metals prices higher.
“We think that fundamentals remain intact. Central banks continue to anchor demand, with roughly 800 tonnes of buying expected in 2026, increasingly targeted in tonnes rather than value, making demand price-inelastic. Investor and central-bank demand averaged around 750 tonnes per quarter in 2025, well above the ~380 tonnes historically required to support higher prices. Even with some moderation, expected 2026 demand remains comfortably supportive.”
However, while some analysts argue the fundamentals point to further gains, others have a word of caution around the current market technicals, which could see additional downside before stabilisation.
“The fact that, even after the falls of Friday and today, silver and gold are only at one-month lows, underscores how huge the surge was over the last four weeks,” said Chris Beauchamp, Chief Market Analyst UK at IG.
“The speed of the decline has not been witnessed for decades, and the selloff is unlikely to halt soon, even if the pace slows.”