Gold (GC=F) and silver (SI=F) appeared to be stabilizing on Monday after dramatic losses and reversals of parabolic gains that rocked Wall Street.
“The dam has burst,” Tom Essaye, founder of Sevens Report Research, told Yahoo Finance on Monday. “Anyone can realize that the parabolic move we saw last week and much of last month is unsustainable.”
Gold prices hovered near $4,700 a troy ounce on Monday after falling more than 9% on Friday, with many on Wall Street attributing the sell-off to President Trump’s nomination of Kevin Warsh to be the next Federal Reserve chair.
Meanwhile, silver futures fell to around $76 an ounce on Monday, a drop of more than 25% from Friday.
More red: Silver Price Volatility: What to Know and How to Invest
Despite the sharp sell-off, some market watchers are not convinced the worst is over.
“The volatility in these types of safe-haven investments is a little troubling,” Nancy Tengler, CEO and CIO of Laffer Tengler Investments, told Yahoo Finance on Monday.
Tengler noted that investors would be better off “stepping back and waiting for things to work out.”
“I would stay away from this trade because it becomes a momentum trade,” she added.
Much of gold’s price action over the past year can be attributed to central bank buying, a weakening dollar fueling devaluation trades and private sector investor participation in trades.
Over the weekend, JPMorgan analysts doubled down on their bets on gold, predicting that demand from central banks and investors will be sufficient this year to ultimately push gold prices to $6,300 an ounce by the end of 2026.
“Even with the near-term volatility, we believe the longer-term rebound momentum will remain intact,” analysts wrote in a note on Sunday.
Silver’s rise was even more alarming, with strategists pointing to speculation by Chinese traders. Prices surged more than 60% in January before falling back sharply.
JPMorgan analysts predict that silver prices will rise to an average floor of around $75-80 an ounce, while the precious metal is “unlikely to give up its recent gains entirely.”
“Our analysis shows that while the air is getting thinner as gold prices move higher, we are not yet close to a point where the structural rebound in gold prices is at risk of collapsing under its own weight,” they wrote.
Ole Hansen, head of commodity strategy at Saxo Bank, pointed out that as the Lunar New Year approaches and exchanges increase trading margin requirements, the near-term risk appetite for precious metals may be limited.
“Against this backdrop, patience appears to be warranted and chasing the market until more clarity emerges is unlikely to be the most prudent strategy,” Hansen wrote on Monday.
