Gold and silver markets experienced a historic crash on January 31, 2026, recording their worst single-day decline since 1980. Gold plunged 11% to $4,745 per ounce, while silver saw an even steeper fall, crashing 36% to $78.29 per ounce.This sudden downturn wiped out an estimated $15 trillion from the combined market value of these precious metals.The dramatic sell-off followed a period where gold had reached a record high near $5,600, and silver briefly topped $120 per ounce.[financemagnates+10]
Fed Nominee Sparks Sell-Off
The catalyst for this sharp reversal was President Trump's nomination of Kevin Warsh as the next Chair of the Federal Reserve.Markets interpreted Warsh's historically hawkish stance as a sign of potentially tighter monetary policy and reduced concerns about the Fed's independence.This perception strengthened the U.S. dollar, which typically moves inversely to precious metals, and prompted a wave of profit-taking after a significant rally.[goldsilver+16]
Adding to the selling pressure, the CME Group, a major derivatives exchange, increased margin requirements on both gold and silver futures.This move forced leveraged traders to liquidate their positions quickly, accelerating the market's decline.Analysts noted that both metals were in "aggressively overbought territory" before the crash, suggesting a correction was due.[financemagnates+7]
Analysts Remain Bullish Long-Term
Despite the dramatic fall, many financial institutions and analysts maintain a bullish long-term outlook for gold. JPMorgan, for instance, raised its year-end gold price forecast to $6,300 per ounce.Deutsche Bank reiterated its projection for gold to reach $6,000 by year-end.Michael Hsueh, head of metals research at Deutsche Bank, described the recent rout as "purely tactical," not a signal of a "durable, fundamental shift" in precious metals prices.Goldman Sachs also lifted its year-end gold price target to $5,400.[goldsilver+7]
Following the sharp drop, both metals have shown signs of recovery this week. Spot gold climbed as much as 10-12% from its low of $4,404, while silver rose over 20%, moving back above $87 per ounce.As of February 4, 2026, gold is trading around $5,063.83, after an intraday surge of $117.02.Ole Hansen, head of commodity strategy at Saxo Bank, noted that gold has cleared its initial retracement hurdle at $4,858, shifting focus toward $5,000. For silver, key levels sit higher at $90.58 and $96.52.[timesofindia+2]
Key Drivers for Precious Metals
Several underlying factors continue to support the long-term appeal of gold and silver. Global geopolitical risks, ongoing currency concerns, and record levels of national debt drive investor demand for safe-haven assets.Central banks worldwide have steadily increased their gold purchases, diversifying their reserves away from dollar-denominated assets.This "de-dollarization" trend provides a fundamental demand floor for gold.[goldsilver+10]
Analysts also view gold as an "anti-fragile asset" and a "more resilient inflation hedge" in uncertain economic times.For silver, its role extends beyond a safe haven, benefiting from increasing industrial demand, particularly from the rapidly growing artificial intelligence (AI) sector.Michael Widmer, Head of Metals Research at Bank of America, projects gold to average $4,538 per ounce in 2026 and believes silver could peak between $135 and $309.[goldsilver+2]
Volatility Expected to Continue
While the long-term outlook remains positive for many, short-term volatility is likely to persist. Maneesh Sharma, AVP - Commodities & Currencies at Anand Rathi Shares and Stock Brokers, expects continued price swings in the coming days.A stabilizing U.S. dollar could reduce some near-term support for precious metals.Uncertainty surrounding future interest rate trajectories and the speculative nature of recent trading could also lead to further price fluctuations.[timesofindia+6]
The recent sharp decline, while unsettling, is seen by some as a necessary correction after an "outsized rally."It has flushed out some of the speculative leverage in the market.Ultimately, the fundamental drivers for gold and silver, including global economic uncertainty and central bank actions, are expected to continue supporting their value in the medium to long term.[zacks+1]
