Precious Metals’ Black Friday Collapse

The powerful bull run in precious metals met a sharp reckoning on Friday as both gold and silver suffered an abrupt and aggressive selloff.

After months of strong gains driven by central bank buying and inflation hedging, the market became overextended. Technical indicators were stretched, positioning was crowded, and leverage was high. In that environment, even modest selling pressure was enough to trigger a broad liquidation.

Gold’s Steepest Drop in Years

Gold posted one of its largest one-day percentage declines in decades, with losses accelerating during the U.S. session. The move was not sparked by a single geopolitical headline or macro shock. Instead, it reflected the fragility of a one-directional market. Heavy speculative positioning and overstretched charts left prices vulnerable. Early profit-taking quickly escalated into forced selling as stop-loss orders and margin calls were triggered across futures markets. The result was a fast, mechanical unwind that hit late and leveraged buyers hardest.

Silver’s “Air-Pocket” Collapse

Silver’s move was even more severe. Prices plunged nearly 35% intraday, highlighting the metal’s structural vulnerability. Silver’s smaller market size, thinner liquidity, and high retail participation amplify volatility, especially during risk-off episodes. Once prices broke key technical levels, buying interest disappeared. With little depth on the bid side, the market experienced an “air-pocket” decline, where prices fell rapidly with minimal resistance until significant damage had already occurred.

A Momentum Reset

Despite the violence of the selloff, the broader structural case for precious metals remains intact. Many analysts view the move as a necessary reset that flushed out excess leverage rather than a shift in long-term fundamentals. Core drivers such as rising global debt, low real yields, and continued diversification away from the dollar by central banks have not changed. What has changed is positioning. The speculative excess that built up during the rally has been sharply reduced.

Attention now turns to stabilization. Markets are likely to enter a volatile, range-bound phase as prices search for new support and physical demand re-emerges. While near-term price action may remain uneven, sharp corrections of this kind lead to healthier market structures. By clearing leverage and crowded trades, the selloff may ultimately lay the groundwork for a more sustainable recovery over time.

Latest Analysis

A World Economy in Transition

The financial market is going through an important transformation away from the economic model that characterized the past three decades.

Detail

Gold’s Sharpest Fall in Decades Ends Rally

Precious metals' strong rally comes to a halt.

Detail