Gold & Silver Slump After Parabolic Rallies, Traders Wary

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Gold and silver slumped again today following Friday’s historic sell-off, as sellers continue to pummel the beleaguered metals complex.

Bullion.Directory precious metals analysis 02 February, 2026
By Nick Cawley
Contributing analyst at Solomon Global

Gold and silver have both wiped out this year’s parabolic rally despite the fundamentally positive backdrop remaining unchanged.

Silver has slumped in excess of 40% over the last three trading sessions, while gold has fallen by over 20% since last Thursday’s high.

While both sell-offs are sharp, and in silver’s case historic, it’s worth noting that both metals have only retreated to levels last seen at the start of the year, highlighting just how parabolic the rally in the metals complex had become.

Gold Daily Price Chart

Silver Daily Price Chart

One widely noted trigger for the recent sell-off was President Trump’s nomination of Kevin Warsh as the next Federal Reserve chair. Warsh, a former Fed governor, favours reducing interest rates but comes from a hawkish background and will react to any uptick in inflation.

This news sent the dollar higher, which in turn made precious metals more expensive, reducing their attractiveness to investors.

The severity of the crash also underlines how crowded and overheated the precious metals trade had become. When Warsh’s nomination hit the wires, profit-taking accelerated rapidly as investors rushed to lock in gains. The combination of a strengthening dollar, concerns about Fed policy remaining restrictive, and a massively overleveraged and overheated market created perfect conditions for a sharp correction.

While price action is expected to remain volatile over the coming days, the underlying drivers of the multi-month rally remain intact. While US interest rates may not fall as quickly as previously thought, political uncertainty remains, and in silver’s case, the mismatch between demand and supply has not changed.

While buying at current levels may still seem risky in the short term, both gold and silver are likely to remain in longer-term demand.

Once the current market shake-out is over, both gold and silver are likely to trade at higher levels in the months ahead.

This article was originally published here

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