Recently, I have written a lot of analysis about gold, and regarding the sharp plunge in precious metals last night, I naturally want to say a few words:

This wave of “epic” waterfall, in simple terms, is characterized by: large magnitude, rapid speed, and extreme volatility. Especially the more than 30% plunge in silver, which is a textbook example of a “thin market + high leverage” collective stampede in a short period.

Many people's first reaction is: has the trend come to an end? Personally, I lean more towards the judgment that—this looks more like a deleveraging shock triggered by policy expectations, which will lead to high volatility and oscillation in the short term, but is not enough to prove a long-term logical reversal overnight. Of course, I don’t want to say everything definitively: the market in the next one or two weeks will naturally give its own answer.

First, clarify “what happened”
Last night’s decline didn’t happen out of nowhere; it’s more like a suddenly tightened rope: recently, gold and silver prices rose too smoothly, too quickly, with positions too crowded, and the market was already in a state of “any slight wind or grass movement will cause tremors.” The spark that ignited this rope was the market’s re-pricing of the monetary policy path—especially the expectations around the Fed chair nomination and policy orientation. This expectation shift was quickly interpreted by the market as a strengthening dollar and rising real interest rate expectations, so precious metals, as “inverse assets,” were the first to be sold off.

Originally, selling itself isn’t scary; what’s frightening is that in an environment with high leverage and a high proportion of algorithmic trading, “selling” quickly escalates into a “forced liquidation chain”: falling prices trigger stop-loss orders, which trigger larger sell orders, which in turn increase margin pressure, ultimately leading to a break in the chain of price gaps and a stampede.

Now, looking back at the speed of the market, you realize this wasn’t a slow, deliberate sell-off after understanding, but rather a passive position pushing downward together. Once you understand this, you can see why I say it’s more like a “deleveraging shock,” rather than a “fundamental reversal.”
A long-term trend reversal usually requires a slower, more solid process: for example, continuous strengthening of the dollar and real interest rates, structural cooling of safe-haven demand, withdrawal of long-term buyers (especially central banks and ETF investors), and repeated failure of gold to rebound at key levels, forming weekly-level step-downs.

And all of this happened too quickly last night, more like the market was suddenly drained of liquidity after extreme crowding. In other words, it’s first an “event of positions and volatility,” and then a “macro event.” This distinction is very important; otherwise, if you interpret the “short-term forced liquidation” market with a “long-term narrative” perspective, it will only increase anxiety.

So, is it a short-term correction or the end of the trend? We can’t rely solely on intuition. In the coming weeks, pay attention to these points:
First, whether gold can regain key pivot levels and form a base within the next one or two weeks; even if volatility remains high, as long as it can reorganize order, it indicates that last night’s move was more “liquidation” rather than “collapse.”
Second, whether the dollar’s strength is a “one-time jump” or a trend of sustained appreciation; if it’s just emotional surges, precious metals usually have a breathing window; if the dollar and real interest rates continue to rise, then the medium-term pricing of precious metals will be forced downward.
Third, whether silver can stop the “rebound being crushed” pattern; silver is often a more speculative metal among precious metals, and if it continues to weaken, it often means that the previous momentum and leverage bubble have burst, and emotional recovery will be slower, dragging down the entire precious metals sector’s risk appetite. To put it more plainly: if silver remains “soft,” gold will find it hard to “harden.” Based on this framework, I lean towards the path of: short-term entering a high-volatility oscillation zone. After such a break in the chain, the market usually doesn’t rebound immediately in a V-shape, but rather “rebound first, then verify, then choose a direction.”

Here’s a reality I think I must remind you of: after such a market, there is often a “second dip.” The first decline is caused by forced liquidation and stop-loss-driven passive selling; the second dip often occurs after a failed rebound, confirmed by trend and sentiment funds as “lack of rebound strength,” leading to another round of selling. That’s why I don’t recommend treating last night as a “buy-the-dip immediately or clear-all immediately” event, but rather as a “test of structural change”: the market will write the answer on the chart in the coming period—and what we need to do is, don’t rush to jump in.

That’s all I want to say to you, and also a note to myself🫡🫡🫡

#Gold