Last week's trading session turned the gold market into a veritable "roller coaster." Prices constantly reversed direction with large swings throughout the day – a rare occurrence for an asset traditionally considered a safe haven.
The familiar calmness of gold has almost disappeared, replaced by rapid ups and downs, enough to keep even seasoned investors on edge, closely monitoring every development.
Gold prices have just experienced a volatile week (Image: Gold Industry Group).
The "earthquake" and the purge of hot money.
According to data from Kitco News, the precious metals market witnessed volatility described as "challenging all historical assumptions" last week. Gold prices at one point retreated from their record high, fluctuating sharply in the $4,500-$5,000 per ounce range.
More notably, silver has experienced dramatic freefalls followed by spectacular rebounds. The Economic Times noted that the spot price of silver had fallen below $65 before unexpectedly reversing course, surging more than 8% to $77.33 per ounce in a short period.
Analysts explain this rollercoaster phenomenon as an inevitable consequence of an overheated growth cycle. With gold prices repeatedly reaching more than a dozen historical highs in just a few weeks, the market became overcrowded with speculative positions.
A crucial piece of information for investors to note is the tightening of risk management by major exchanges. According to the Economic Times, CME Group has had to increase margin requirements for gold and silver futures contracts for the third time in just two weeks.
This dealt a severe blow to highly leveraged speculators, forcing them to close their positions, thereby creating waves of sell-offs that cleanse the market. However, viewed positively, this correction can be seen as "taking one step back to take three steps forward," helping to remove excess hot money and bring the market back to a more balanced state.
Why hasn't trust been shattered yet?
Although volatile prices have caused many to hold their breath, bargain hunting continues even when prices fall sharply. So what is supporting investor confidence at this time?
Firstly, there's the weakening of the US dollar. The Economic Times points out that a 0.2% drop in the USD Index immediately stimulated demand for gold from investors holding other currencies. When the greenback weakens, gold becomes cheaper and more attractive to international investors.
Secondly, although short-term speculative positions have been eliminated, the flow of money from "big players" remains intact. Kitco News emphasizes that central banks are still diligently buying gold on record scales.
Physical demand in key markets like India and China remains robust despite high prices. This indicates a structural shift: people are buying gold not just for short-term speculation, but as a long-term store of value amid concerns about global public debt and fiscal risks.
Furthermore, geopolitical factors remain a key element supporting gold prices. While the US-Iran negotiations in Oman initially showed positive signs, they still hold many uncertainties. In this context of uncertainty, gold remains a safe haven that investors are reluctant to abandon.
The $6,000 scenario: A dream or reality?
Following the dramatic developments of the past week, can gold conquer the $6,000/ounce mark by the end of this year as many have predicted?
Experts remain fairly optimistic, but with a degree of caution. According to Kitco News, many major banks maintain their forecasts that gold will approach the $6,000 mark. Their argument is not based on hourly price fluctuations, but rather on long-term macroeconomic trends such as dedollarization and global financial imbalances.
However, Jim Wyckoff, a senior analyst at Kitco Metals, shared a more realistic perspective in the Economic Times. He argued that the current rally is primarily driven by bargain hunting. For gold to truly break through and establish solid new highs, the market needs a stronger impetus, perhaps a major geopolitical event or a clearer signal of an economic recession.
Unless there are any major new developments, gold prices are likely to continue fluctuating within a wide range as they consolidate. This is a market phase that tests investor sentiment.
Many major banks still expect gold to approach the $6,000/ounce mark by the end of the year (Photo: Unsplash).
Looking back at the events of the past week, it's clear that gold is no longer a playground for the faint-hearted or those hoping to get rich quick overnight. The increase in margin requirements and the large price swings by CME serve as the clearest warning about the risks of excessive leverage during this period.
For individual investors, a strategy of "accumulating assets" and tight risk management is perhaps the wisest move. Instead of being swept away by fear (FOMO) when prices surge or panic selling when prices correct, look at the bigger picture. Gold is revaluing risk in real time, and this process rarely happens smoothly.
Deep corrections, as experts believe, could be opportunities to increase asset holdings at reasonable prices for a longer growth cycle ahead.
Source: https://dantri.com.vn/kinh-doanh/gia-vang-tuan-qua-rung-lac-du-doi-thu-thach-niem-tin-nha-dau-tu-20260207112206215.htm
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