Gold and silver 'plunge': Is it a bubble burst or a breather after the frenzy?
[Market Flash] Just before this weekend, the global precious metals market experienced a "Black Friday" that will go down in history. After weeks of nearly parabolic gains, gold and silver both suffered an "epic" plunge today. The bullish camp collapsed within hours, and the market was engulfed in a panic selling frenzy.
1. Plunge Data: Shocking Red Screens
Today's market performance can be described as a "cliff dive," with prices reversing sharply from the all-time highs set this week, marking one of the steepest declines in recent years:
Spot gold fell about 8%-10%, plummeting $500 in a single day to as low as $4,715/oz (breaking below the $5,000 level).
Spot silver tumbled over 20%, dropping more than $30 intraday to $77-$90/oz (testing lows near $77).
U.S. Stocks: After the market opened, the precious metals sector faced a collective "liquidation."
Industry Giants: $Newmont(NEM.US) fell over 10%, $Harmony Gold Mining(HMY.US) dropped over 12%.
ETF Sell-off: $SPDR Gold Shares(GLD.US) plunged about 9.77%, while the silver ETF ($iShares Silver Tr(SLV.US)) crashed 28.46%.
Leveraged Products: Leveraged ETFs betting on precious metals saw even more brutal declines of 20%-30%.
2. Market Sentiment: From "Extreme Greed" to "Extreme Fear"
Today's market action was a classic case of sentiment collapse, described by traders as "everyone and their dog rushing for the exits":
Profit-Taking "Long Squeeze": Before this, silver had surged 50% in January, and gold was approaching $5,600. The market was in "extreme greed" mode, with the RSI spiking to 90. Once key support levels broke today, highly leveraged longs triggered a chain reaction of "panic" selling to limit losses.
Fed's Hawkish Pivot Shock: Trump announced the nomination of Kevin Warsh as the next Fed chair. Warsh is seen as a staunch defender of Fed independence, and markets expect he may not cooperate with aggressive rate cuts. The dollar index rebounded sharply, instantly reversing the "monetary easing expectations" that had supported gold.
Faith Shaken: Investors previously saw gold as the only "safe haven," but today's synchronized plunge in gold, silver, and even Bitcoin has raised doubts about whether this was just a "speculative illusion" fueled by excess liquidity. Wall Street's focus shifted overnight from "how high can gold go" to "when will this bubble land."
Today's crash isn't a total destruction of fundamentals but more like a violent cleansing of excessive speculation and high leverage. While painful, this extreme move forcibly corrected the valuation disconnect from the rapid rally.
Risk Warning: Volatility has hit historic extremes. After a high-volatility "Black Friday," markets often need time to rebuild a bottom. Blindly buying the dip or chasing shorts carries extreme risks.
Patient capital, waiting for structural repair → This is a "pullback" in the trend.
📉 Without this plunge, there would be no room for the next rally.
👉 After a frenzy, there must be a quake.
👉 Not chasing highs is a trader's last kindness.
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