Gold and silver back in focus for buying. Dip buyers step in

The spot price of gold rises again by nearly 6% to around $4,940 per ounce, after extending Friday’s decline in the previous session, which was the steepest in the past decade. Silver jumps more than 10%, climbing back above $87 an ounce — amid a revival of risk appetite across broader markets and a weakening US dollar.

Precious metals had retreated from their record highs following a series of warnings from traders and investors that the gains, especially in silver, had been too large and too rapid. Earlier, the rally in metals had been supported by renewed concerns over geopolitical upheaval, currency debasement, and threats to the Federal Reserve’s independence.

The key factors and drivers supporting gold today largely remain unchanged compared with those in place before the correction — geopolitical risks, expectations for easier monetary policy, and the role of metals as portfolio diversifiers. Nevertheless, volatility is likely to remain elevated in the short term as markets continue to digest the recent dislocation.

Some banks are backing a recovery in gold, with Deutsche Bank AG stating that it remains firmly committed to its forecast for bullion prices to rise to $6,000 per ounce.

The extent to which Chinese investors buy the dip will play a role in determining the market’s direction. Last weekend, buyers flocked to the largest precious metals market in Shenzhen to stock up on jewelry and bars ahead of the Lunar New Year. Markets in China will be closed for just over a week starting February 16 due to the holidays. Meanwhile, the country’s major state-owned banks are tightening controls on gold investments to manage volatility.

Gold’s three-day plunge was a long-anticipated correction, but the fundamental drivers of its multi-year advance remain in place, arguing against a prolonged decline in precious metals. Given the low likelihood of a rapid global monetary tightening cycle and ongoing geopolitical concerns, a more moderate and gradual rise in precious metals appears more likely.

Both the sharp selling pressure and the equally swift recovery highlight a hypersensitive market driven by sudden, headline-led emotions rather than clear direction, leaving sharp and uncomfortable volatility as the short-term norm.

Investors are also monitoring the situation in Iran after US President Donald Trump said that talks on a new nuclear deal could take place in the coming days. A breakthrough on that front could reduce gold’s appeal as a safe haven and put pressure on prices.