The gold and silver markets were hit hard with a sudden price drop that wiped out an estimated $1.28 trillion in market value. Even traditional safe havens therefore appear to be sensitive to macroeconomic shocks, seasonality and rapid shifts in liquidity.
Correction followed extreme force
The correction follows an exceptionally strong rally earlier in 2026, in which gold rose above $5,500 per ounce and silver reached record levels. It is precisely after such rapid increases that the chance of profit-taking and sharp counter-movements increases historically.
Silver in particular was hit hard and is now trading well below its recent peak. Due to the smaller market and stronger industrial demand, silver traditionally reacts more strongly to changes in sentiment and liquidity than gold.
Seasonal effects around Lunar New Year
An important short-term explanation lies in the celebration of Chinese New Year. During this festive period, trading activity temporarily drops in large parts of Asia, including in China, Hong Kong, Singapore and South Korea.
Lower liquidity could amplify price movements in global futures markets, especially in commodities where Asian physical demand is crucial. The temporary absence of factories and traders could depress demand and increase volatility, with potential for recovery once normal activity returns.
Macro pressure from stronger dollar and Fed signals
In addition to seasonal factors, the broader macro picture also plays a role. Signals that support the US dollar, such as expectations around monetary policy or geopolitical developments, traditionally put pressure on precious metals. A stronger dollar makes gold and silver more expensive for international buyers.
ETF flows also show caution: several funds fell several percent, indicating profit-taking after the previous rally and a wait-and-see attitude among investors.
Correction within a longer cycle?
Some market strategists see the current move as a phase of volatile consolidation after a strong advance. Technically, important support levels are lower, which can determine whether the decline stabilizes or deepens.
At the same time, structural forces such as rising global debt, currency weakening and historic gold-silver cycles continue to point to a possible extended bull market in precious metals. In that scenario, the current correction could be an intermediate phase rather than the end of the trend.
The recent crash therefore shows two realities: in the short term, liquidity and macro sentiment dominate, but in the long term, fundamental monetary factors continue to guide gold and silver.
Source: https://newsbit.nl/zorgt-chinees-nieuwjaar-voor-crashende-goudprijs/
