'Total madness': how one of the most dramatic gold and silver collapses unfolded

January 30, 2026 will go down in precious metals market history as the day gold lost its safe haven status, causing industry veterans to talk about the "craziest" price movement of their careers. After weeks of rapid gains, precious metals prices collapsed at record speed, with silver posting its biggest drop in history and gold its worst performance in more than a decade. According to market participants interviewed by Bloomberg, the foundation for this reversal was an explosive mixture of speculative Chinese capital and technical factors.

The rally in the metals market has been forming for several years, relying on central bank purchases and investors' desire to hedge the risks of depreciation of fiat currencies, Bloomberg writes. However, in recent weeks this process has moved into a terminal, "parabolic" stage, which the chief investment officer of hedge fund Infrastructure Capital Advisors Joe Hatfield characterized as a pure "momentum trade" (momentum trade).

The key driver was the wave of "hot money" of speculators from China, which was joined by the managers following the trend. The excitement spilled over to the physical market as well. "We have bars of certain sizes sold out for weeks ahead, and people - they are still buying," Dominik Sperzel, head of trading at Heraeus Precious Metals, described the situation. Heraeus is a leading gold processor.

The imbalance was most pronounced in silver. Record volumes of bets on the rally through options triggered a squeeze, when traders hedge positions by buying the asset following a rise in price. "As we get squeezed upward, they have to mechanically keep buying more," Alexander Campbell, former head of commodities at Bridgewater Associates, explained to Bloomberg. - And that explains why we're going up so fast and going down so fast."

The trigger for the bursting of the bubble in the precious metals market was news from the US. The final jump in prices to historic highs last week was triggered by Donald Trump's comment that the dollar is "doing great". However, the situation soon reversed, and the occasion was again given by Trump. After his hints that Kevin Warsh, a monetary hawk, would become the new head of the Fed, the US currency began to strengthen, which signaled profit taking.

The collapse was precipitous: gold lost more than $200 an ounce in about 10 minutes, and silver plummeted 26% on the day. MKS PAMP industry strategist Niki Shiels characterized the market on Jan. 30 as "parabolic," "frenzied" and "untradeable." January 2026, she said, will go down in history as the most volatile month for precious metals.

"In my career, this is definitely the craziest thing I've seen," admitted Heraeus' Sperzel. - Gold is a symbol of stability, but a move like this is not a symbol of stability." The key difference in this crash was the behavior of investors in China: whereas in the past they bought back drawdowns, this time they started selling. "China sold, and now we're dealing with the consequences," Bridgewater's Campbell stated.

The beginning of the new week did not bring relief to the "bulls": on February 2, the decline in prices for gold and silver continued. Now the attention of analysts is focused on the physical market of China, which is traditionally activated before the Lunar New Year. The key question is at what point buyers will return. A pullback before the traditional buying season could offer an entry point for retail investors who missed the rally, Bloomberg notes.

Liu Shunming, head of risk at Shenzhen Guoxing Precious Metal Trading Company, noted the difference in sentiment on the two major metals. "Gold looks relatively strong; I see a lot of drawdown buyers entering the market in the past two days, buying jewelry and bullion ahead of the Lunar New Year," said Shunming. However, the prospects of the second metal are assessed skeptically: "As for silver, there is a strong tendency to stay on the sidelines," the expert summarized.

This article was AI-translated and verified by a human editor