Gold, Silver Rebound After $4 Trillion Single-Day Wipeout
Precious metals stage recovery with gold up 6% to $4,913 and silver jumping 10% after Friday's historic crash. Analysts debate whether the rout signals a top or a buying opportunity.
Gold and silver are bouncing. Whether it's a dead cat or the start of a recovery depends on who you ask.
Spot gold climbed 6% Tuesday to $4,913 per ounce after plunging 21% from its record high of $5,600 last week. Silver jumped 10% to around $87, recovering from a 40% collapse that rivaled the 1980 Hunt brothers crash.
The combined market value of gold and silver lost roughly $4 trillion in a single day on Friday. That kind of move demands attention.
What Happened Friday
The selloff had multiple triggers, all hitting at once.
President Trump's nomination of Kevin Warsh to replace Fed Chair Jerome Powell spooked precious metals traders. Warsh is viewed as a hawk on inflation—exactly the profile that undermines the gold bull case. The dollar rallied on the news, putting additional pressure on commodities priced in greenbacks.
Then CME Group raised margin requirements on gold and silver futures. Traders running leverage of 50x to 100x—common in the commodities world—faced instant margin calls. Forced liquidations cascaded through the market.
Silver's 31% single-day drop was its worst since the Hunt brothers' squeeze collapsed in 1980. Gold hadn't fallen this fast since the 2013 taper tantrum.
The Bull Case for Recovery
Deutsche Bank's strategists argue the rout was technical rather than fundamental. "History suggests these are short-term catalysts," they wrote. Central bank buying, de-dollarization trends, and inflation concerns haven't disappeared.
JPMorgan maintains a $6,000 gold target for 2026. UBS remains constructive. Citi raised its short-term silver forecast to $150 per ounce, arguing the metal's industrial uses in solar panels and electronics provide a floor.
Gold had rallied 66% in 2025—its best year since 1979. Some pullback was inevitable. The question is whether Friday marked the end of that run or just a violent shakeout of weak hands.
The Bear Case
Not everyone is buying the dip.
Pace 360 analysts see an 80% probability that gold has already topped. They characterize Tuesday's rebound as a "dead cat bounce"—a temporary recovery before further downside.
The fundamental backdrop has shifted. If Warsh takes the Fed in a more hawkish direction, real interest rates could rise. Gold pays no yield; it competes with Treasuries for safe-haven flows. Higher real rates historically hurt bullion.
The leverage unwind also exposed how crowded the trade had become. When a market needs forced selling to find buyers, it suggests prices had outrun fundamentals.
What Traders Are Watching
The immediate focus is whether gold can reclaim $5,000. That level has psychological significance and would signal the rout was a correction rather than a reversal.
Silver's volatility makes it harder to read. The metal touched a record $121.64 last week before collapsing below $80. It's now back near $87. That's a 40-point range in less than a week—more casino than commodity.
Margin requirements remain elevated, which should dampen the most extreme leverage. But that also means fewer buyers can participate, potentially capping upside.
Positioning Into Volatility
The safe trade is to wait. Let the dust settle. See if the rebound holds.
For those looking to add exposure, the asymmetry has improved. Gold at $4,900 offers better risk-reward than gold at $5,500, assuming the long-term bull thesis remains intact.
Silver is a higher-beta play on the same theme. It fell more and has rebounded more. If precious metals resume their rally, silver typically outperforms. If they resume their fall, silver gets hit harder.
This story isn't over. The Fed's path, dollar strength, and global risk appetite will determine whether last week was the top or just a scary detour. For more on how the Fed is navigating these cross-currents, see our economy coverage.