Gold and Silver Prices Stabilize After Volatile Trading Session
Gold and silver prices maintained a steady trajectory on Wednesday, February 4, following a partial recovery from significant losses incurred after retreating from their record-breaking peaks. During Asian trading hours, spot gold experienced an upward movement of as much as 2%, surpassing the psychological threshold of $5,000 per ounce. Concurrently, spot silver demonstrated a robust gain of 4%, reaching $86.9 per ounce.
Recent Performance and Market Dynamics
In the preceding trading session, gold prices witnessed a substantial surge of over 6%, driven by improved risk appetite among investors and a softening US dollar. Despite this notable rebound, the closing prices on Tuesday remained approximately 12% below the all-time high achieved on January 29. Nevertheless, gold has maintained an impressive year-to-date increase of nearly 15%, reflecting sustained investor interest.
Factors Fueling the Precious Metals Rally
The recent rally in gold and silver prices can be attributed to a confluence of factors. According to a Bloomberg report, Chinese investment funds and Western retail investors accumulated significant positions in precious metals. Additionally, aggressive call-option buying and substantial inflows into leveraged exchange-traded products further amplified the upward momentum. This rally, however, faced a sharp reversal during Asian trading on Friday, with the downturn extending into Monday.
The report also highlighted heightened activity in Shenzhen, home to China's largest bullion market, where crowds flocked to purchase jewelry and bars ahead of the Lunar New Year celebrations. Chinese markets are scheduled to close for slightly over a week starting February 16 for the holiday. Meanwhile, major state-owned banks in China have intensified oversight of gold investments to mitigate market volatility.
Geopolitical tensions, particularly between the US and Iran, remain a critical focus for investors. President Donald Trump's indication that discussions on a new nuclear deal could commence in the coming days has market participants on alert. Any positive developments in this arena could diminish gold's appeal as a safe-haven asset, potentially exerting downward pressure on prices.
Last month, precious metals experienced a sharp ascent, propelled by speculative buying, escalating geopolitical risks, and concerns regarding the Federal Reserve's independence. However, this rally encountered a sudden reversal toward the end of the week, with silver recording its steepest single-day decline on record and gold posting its most significant drop since 2013. Market observers had repeatedly cautioned that the rapid gains were excessive and unsustainable, contributing to the pullback.
Expert Insights on Future Price Trajectories
Prithviraj Kothari, Managing Director at RiddiSiddhi Bullions Ltd., President of India Bullion and Jewellers Association Ltd., and Chairman at Jain International Trade Organisation, provided his perspective on the market outlook. He suggested that gold is likely to remain range-bound, while silver may exhibit higher volatility in the near term.
"Global factors such as expectations of a dovish US Federal Reserve, elevated geopolitical risks, fiscal stress in major economies, and sustained central-bank and ETF buying continue to support precious metals. Gold is likely to remain range-bound with a positive bias, while silver may see higher volatility but benefit from strong industrial demand, keeping medium- to long-term trends intact," Kothari explained.
Technical Analysis and Price Projections
Ponmudi R, CEO of Enrich Money, offered a technical outlook for both metals. He noted that COMEX Gold is currently trading near the $4,660–$4,860 reference zone after cooling off from a sharp spike above $5,500.
"The broader trend remains constructive, but the earlier vertical rally pushed momentum into overbought territory, triggering profit booking and orderly price digestion. Prices continue to hold above key moving averages, indicating a technical correction rather than a trend reversal. Strong demand is visible in the $4,500–$4,400 support band. Sustained consolidation above this base could set up the next leg higher, with a decisive move above $5,000–$5,100 reopening upside toward prior highs," Ponmudi stated.
Regarding silver, Ponmudi added that COMEX Silver is consolidating within the $75–$85 range after testing record highs above $121.6. "The broader bullish structure remains intact, though the sharp rally led to overbought conditions and aggressive profit booking. Prices are holding above key moving averages, suggesting healthy consolidation rather than trend exhaustion. Support lies at $71–$75, while a sustained breakout above $88–$90 could trigger the next impulsive move toward $100–$105. Structural supply deficits and steady industrial demand continue to support the bullish bias," he elaborated.
Disclaimer: This article is intended for educational purposes only. The views and recommendations expressed herein are those of individual analysts or broking companies and do not represent the stance of Mint. Investors are strongly advised to consult with certified experts before making any investment decisions.
