Isn't the sharp drop in gold and silver the right time to enter the market? Caution is still needed when entering at low prices

The sell-off that swept through the precious metal market erupted rapidly and fiercely. According to Business Insider, the market's reaction to US President Trump's nomination of Kevin Walsh as Federal Reserve Chairman has caused widespread chaos, becoming the direct trigger that crushed gold and silver prices. As a result, silver prices plummeted by over 30% in a single day, with the largest intraday drop even approaching 36% at one point, reaching as low as $74.28 per ounce; The price of gold fell more than 10% synchronously, breaking through the $4700/ounce mark during trading and hitting a new low of $4682/ounce, setting a new stage low. The two major precious metals experienced a "cliff like" decline simultaneously, and market panic spread instantly.

According to Wind data, as of last Friday's close, spot gold fell 9.25% to $4880.034 per ounce, completely giving up all gains of the week; Spot silver closed down 26.42% at $85.259 per ounce, a drop of over 30% compared to the historical high of $121.654 per ounce set on January 29, and a rare short-term correction in history. At the same time, the futures market also suffered heavy losses, with COMEX gold futures falling 8.35% on Friday and COMEX silver futures closing with a sharp drop of 25.5%, further confirming the downturn in the precious metal market.

The drastic fluctuations in prices directly triggered a chain reaction, and the tragedy of the precious metal market bursting occurred simultaneously. According to Coinglass data, in the past 24 hours, the amount of liquidated positions in cryptocurrency and precious metal related contracts reached as high as 2.559 billion US dollars, with a significant proportion of liquidated positions related to precious metals. The number of liquidated positions on the entire network exceeded 420000, and the amount of liquidated positions in multiple orders dominated, showing a clear "kill more" stampede effect. Many investors who followed the trend in the early stage suffered heavy losses, further exacerbating the panic selling in the market.

Market insiders have conducted in-depth analysis and pointed out that Trump's nomination of Walsh as the chairman of the Federal Reserve was not the only reason for the sharp drop in gold and silver prices, but rather the "trigger" that triggered the sell-off. The combination of multiple factors ultimately led to this historic setback. From the perspective of core incentives, Walsh is widely regarded by the market as a hawkish figure. His past stance has shown that he is more focused on maintaining the credibility of the Federal Reserve and curbing inflation. This expectation directly challenges the previously prevalent narrative of "currency depreciation - perpetual rise of physical assets", leading to concentrated liquidation and fleeing of precious metals.

Krishna Guha, Vice Chairman of Evercore ISI, stated that the market is trading according to the "hawkish Walsh". Walsh's nomination helps stabilize the US dollar and reduce the unilateral risk of its continued weakness, thereby shaking the core logic of precious metals as a "tool to resist currency depreciation", which is also one of the core reasons for the significant decline in gold and silver. In addition, Walsh's nomination also eased market concerns about the loss of Federal Reserve independence, as the important logic of investors flocking to precious metals as a safe haven has been weakened and funds have accelerated their withdrawal from the precious metals market.

In addition to the impact of personnel nominations, technical factors and market environment further amplified the decline. Previously, the prices of gold and silver continued to rise rapidly, and the relative strength index (RSI) of gold recently hit 90, reaching its highest level in decades, indicating that the market is in a severely overbought state and the pressure for correction is already enormous. At the same time, the accumulation of leverage from crowded trading by short-term traders significantly reduces the market's tolerance rate. Once a negative signal appears, it triggers "forced selling", and the exchange increases risk control and trading margin ratio, further accelerating the closing of profit taking positions and amplifying price declines.

Industry experts generally believe that the current precious metal market is volatile, with high volatility becoming an inherent characteristic. Investors need to have a deep understanding of asset characteristics and respect market volatility. For ordinary investors, the short-term advice is to wait and see, and not rush to enter the market to buy the bottom; For investors who already hold positions, it is necessary to strictly control their positions, set stop losses, and avoid subsequent volatility risks; Long term investors can patiently wait for the market to stabilize, gradually layout based on their own risk tolerance, and not be influenced by short-term market sentiment.