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The Gold Rush Peaks and Plunges: Precious Metals Experience Sharp Correction in Early 2026
Precious metals, particularly gold and silver, experienced extreme volatility at the start of 2026.
Gold reached an all-time record high near $5,600 per troy ounce on Thursday, January 29, 2026, while silver surged to around $120 per ounce amid intense investor demand.
This "gold fever" prompted widespread activity: individuals sold existing bullion or jewelry, purchased coins and bars, and invested heavily in gold-related exchange-traded funds (ETFs), treating the metal similarly to stocks.
The rally was fueled by heightened global uncertainty. Key drivers included:
Ongoing geopolitical tensions, such as escalations involving Venezuela and Iran.
President Donald Trump's aggressive foreign policy positions, including repeated proposals for U.S. control over Greenland and strained relations with allies.
Broader concerns over the global order, weakening U.S. dollar, and potential shifts in monetary policy.
In periods of instability, gold traditionally serves as a safe-haven asset—a "psychological reaction" for investors seeking to protect wealth, as noted by experts like Syracuse University political science professor Daniel McDowell. The metal's appeal intensified amid fears of inflation, fiscal deficits, and erosion of trust in traditional currencies and institutions.
However, the surge reversed dramatically on Friday, January 30, 2026. Gold prices plunged sharply—dropping over 10-11% in a single day to settle around $4,700-$4,900 per ounce in various reports—marking one of its steepest daily declines in decades (some sources cite the largest since 1983). Silver fell even more precipitously, losing up to 30-31% from its peak.
The primary catalyst for this correction was President Trump's nomination of former Federal Reserve Governor Kevin Warsh as the next Fed Chair to succeed Jerome Powell.
Warsh, a critic of certain Fed policies and a participant in crisis management during the 2008 financial crisis, was viewed by markets as a stabilizing, conservative choice. This eased earlier fears of excessive White House interference in the Fed's independence or aggressive pressure for rate cuts that could further weaken the dollar.
The announcement strengthened the U.S. dollar, prompting profit-taking among investors who had piled into precious metals as a hedge. A firmer dollar makes gold and silver more expensive for foreign buyers, reducing demand and accelerating the sell-off.
Despite the pullback, prices remain significantly elevated compared to a year earlier—when gold traded below $2,800 per ounce—reflecting persistent underlying factors like central bank purchases, inflation hedging, and macroeconomic risks.
Analysts suggest this correction may represent a healthy reset after a parabolic rally, though volatility is likely to continue amid evolving policy and geopolitical developments.
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