Blog posts of '2026' 'February'

Gold and silver remain volatile and defensive after Friday's rout

OUTSIDE MARKET DEVELOPMENTS: Market conditions remain quite volatile following Friday's rout. In these conditions, my primary responsibility is servicing our hedging clients and managing risk. It's been difficult to find the time to write, so I have to keep it short today.

While month-end profit-taking may have gotten the ball rolling on Friday, forced liquidations – stemming in part from multiple CME margin hikes in recent weeks – began to cascade the stops. When all was said and done, gold ended Friday's session down nearly 9%, while silver ended down a startling 26%.
 
Some attributed last week's losses to President Trump tapping former Fed Governor Kevin Warsh to replace Jerome Powell as Fed Chairman when Powell's term ends in May. Warsh's hawkish past may have been a contributing factor to the initial profit-taking, but it certainly didn't warrant such a massive sell-off.

Warsh has historically tilted hawkish, but more recently, he has expressed support for easing to boost growth.  Warsh also favors shrinking the Fed's balance sheet and avoiding "mission creep" beyond core mandates of price stability and maximum employment.

While concerns about Fed independence will persist, Warsh is a known entity and is not seen as a devoted Trump acolyte. His pick is generally viewed as "market-friendly," and should get Senate confirmation without too much difficulty.

The needle hasn't really moved much in terms of rate cut expectations in the wake of last week's hold and the Warsh announcement. Fed funds futures continue to price just under 50 bps of easing this year, with the first 25 bps cut not fully priced until September.

The dollar index extended to fill the upside gap at 97.45 that was left a week ago. However, last week's tumble to four-year lows leaves the downside vulnerable.

  

Risk appetite remains broadly elevated with stocks and yields trading higher. However, extreme volatility in the metals may keep bulls that got stung sidelined for a bit.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$126.10 (-2.58%)
5-Day Change: -$311.34 (-6.22%)
YTD Range: $4,310.83 - $5,595.02
52-Week Range: $2,773.33 - $5,595.02
Weighted Alpha: +65.64

Gold posted an impressive 13% gain in January, despite Friday's plunge, leaving the low for the year at $4,310.83 protected, at least for the time being. While the yellow metal ended last week more than 12% off the $5,595.02 record high, the weekly loss was less than a 2%!



Gold extended below the 20-day moving average and the 50-day as well before rebounding intraday. The burning question on everyone's mind: Is the low in?

It's too early to tell, but in a normal market, reversion to the 20-day and 50-day would be considered reasonable corrective activity. However, gold had diverged from those key MAs dramatically in recent weeks, spurred by safe-haven demand, a weak dollar, and an absolutely insane silver market.

I'd like to see a close above the 50-day MA today. A close above the 20-day MA would be even more encouraging for long-term bulls. Ideally, I'd like to see the market stabilize between $4,400 and $5,000 for some period, allowing the market to catch its breath and reevaluate the situation.

In the back of my mind is a belief that the underlying fundamentals remain broadly supportive, perhaps most notably the well-established de-dollarization trend. If central banks accelerate their buying on this dip, that will tell us a lot.

February is the tail end of peak Indian wedding season. The retreat in gold seems likely to stimulate Indian demand, as well as  Lunar New Year (17-Feb) buying.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$2.404 (-2.82%)
5-Day Change: -$24.469 (-23.58%)
YTD Range: $71.429 - $121.630
52-Week Range: $28.565 - $121.630
Weighted Alpha: +167.37

Silver plunged an unnerving 26% on Friday, but still posted a more than 19% gain for the month of January. A massive key reversal formed on the weekly chart, suggesting downside follow-through was likely today.



Similar to gold, the 20-day and 50-day MAs were exceeded before the market recovered somewhat. A close above the 50-day would be mildly encouraging. A close back above the 20-day, more so.

The low for the year at $71.429 was approached overnight, but remains intact thus far. I'd like to see a range form between $70 and the halfway back point of the plunge at $96.657 (so far). However, the much more volatile silver market is a tougher one to call.

Emboldened bears may look to run stops below $70, which could put the rising 100-day MA at $62.242 in play. Such a downside extension would keep the pressure on gold as well. Stay buckled up and be prepared for continued volatility. 


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.