Last night up 7%, today down 7%: The truth behind the 24-hour reversal in precious metals

The precious metals market experienced a remarkable reversal within just 24 hours. According to the latest news, spot palladium fell over 5% to $1726.25 per ounce, and spot platinum dropped over 7% to $2272.65 per ounce. Just the night before, futures contracts for these two commodities were still soaring—platinum futures up 7.47%, palladium futures up 7.16%. The rapid shift from surge to plunge highlights how quickly market sentiment can change.

Timeline Comparison: From Safe-Haven Favorite to Profit-Taking

Based on recent information, the trend of precious metals has shown a clear phase shift:

This rapid reversal reflects differing perceptions among market participants regarding short-term peaks.

Typical Signs of Exhausted Bullish Momentum

Why did it surge last night?

According to analysis, the main drivers behind the surge on 01-06 evening include:

• Rising risk aversion: Increasing global macro uncertainties driving funds into precious metals
• Reignited inflation expectations: Repeated market concerns over Federal Reserve rate cuts
• Technical breakthroughs: Key resistance levels broken, triggering short covering
• Capital rotation: Some profit-taking from other markets shifting into precious metals

Notably, UBS pointed out in its latest report that this wave of gold price increase “was driven by silver, platinum, and gold’s own momentum,” rather than independent bullish factors for gold itself. This indicates that the entire precious metals sector’s rise has a certain element of follow-the-leader behavior.

Why did it crash today?

The market reversal logic is relatively clear:

• Profit-taking: After significant gains, institutional and retail investors began cashing out
• Exhausted bullish catalysts: The risk aversion phase has eased, and the market needs new triggers
• Volatility warning: UBS warned that volatility has surged to levels seen at the start of the Russia-Ukraine conflict, which is a risk signal
• Technical correction: Rapid short-term gains have led to technical adjustments

Long-term Trends and Short-term Risks

It’s worth noting that despite the short-term correction, market outlooks for precious metals remain optimistic. According to reports, Bank of America expects the average gold price to reach $4,538 by 2026, and UBS maintains a long-term bullish target of $4,750.

However, UBS also emphasizes an important warning: gold’s volatility has increased significantly, reducing its appeal as a “safe harbor” in investment portfolios. This means that even with a long-term bullish outlook, short-term risks should not be ignored.

Summary

This reversal in precious metals reflects a typical market pattern—rapid rise followed by swift correction. From a trading perspective, this is both a normal profit-taking process and a sign of increased volatility. For investors, it’s crucial to recognize two points: first, the long-term trend remains positive, with many institutions maintaining their annual targets for precious metals; second, short-term volatility has intensified, and chasing highs carries obvious risks. During key windows like the non-farm payroll week, flexible strategy adjustments are more important than blind holding.