Gold falls to $4340, silver drops over 4%

1、 Market Direct Strike: Gold and Silver Joint Heavy Losses, hitting a new low in the stage

Spot gold: quickly fell after opening, hitting a low of $4317.56 per ounce during trading, up from the previous trading day's closing price of $4494.02 per ounce. The largest intraday decline exceeded 3.5%, falling below the key support level of $4340 and breaking the price low since early January. As of the close of the day, spot gold was trading at $4358.49 per ounce, a decrease of 2.38%.

Spot silver: The trend is even weaker, continuing to decline after opening, with the intraday drop expanding to 4.13% and hitting a low of $65.25 per ounce, breaking below the support level of $66, marking the largest daily decline in recent times. As of the close, spot silver was trading at $66.017 per ounce, a decrease of 3.01%.

The domestic market followed the sharp decline, with gold T+D closing at 970.88 yuan/gram, a decrease of 6.65%; Silver T+D closed at 16194 yuan/kg, a decrease of 9.28%. In terms of physical gold stores, the retail price of gold from brands such as Chow Tai Fook and Lao Feng Xiang fell to 1367-1375 yuan/gram, a decrease of nearly 5% from the previous day.

2、 Root cause of sharp decline: multiple negative factors combined, changing market logic

The significant decline in precious metals this time is not caused by a single factor, but rather the result of multiple negative resonances such as the Federal Reserve's policy shift, geopolitical logic reversal, and capital profit taking.

The hawkish Federal Reserve exceeded expectations, with high interest rates suppressing gold prices: this is the core trigger for this round of sharp decline. The March Federal Reserve interest rate meeting released a strong hawkish signal, lowering the expectation of a rate cut in 2026 from three to one, and delaying the first rate cut window until after September. Federal Reserve Chairman Powell made it clear that "interest rate cuts will not be considered until there is clear progress in reducing inflation". As a result, the yield on 10-year US Treasury bonds soared to 4.39%, and the US dollar index broke through the 105 mark, setting a new high for 2026. As an interest free asset, the opportunity cost of holding gold increases significantly with the rise in US bond yields. Funds have shifted massively from gold to interest bearing assets such as the US dollar and US bonds. The world's largest gold ETF, SPDR, has seen a net outflow of holdings for 8 consecutive days, with a cumulative reduction of over 40 tons.

The reversal of geopolitical logic and the failure of hedging attributes: The continued escalation of the Middle East conflict has pushed up oil prices to $107 per barrel, which has instead strengthened market concerns about inflation and further consolidated the necessity for the Federal Reserve to maintain high interest rates. The traditional logic of "buying gold in troubled times" as a safe haven has been completely reversed, and geopolitical conflicts have shifted from favorable to unfavorable for gold, resulting in a significant decrease in demand for gold as a safe haven.

Fund stampede and profit taking exacerbate market selling pressure: In the early stage, gold prices accumulated a large number of profit taking positions, and after the Federal Reserve's policy shift, institutional funds concentrated on taking profits and leaving. At the same time, after the gold price fell below the key support level, the programmed trading system automatically triggered a stop loss order, triggering a liquidity stampede. Within half an hour, a large number of sell offs emerged, forming a vicious cycle of "falling closing accelerating the decline". In addition, the pace of global central bank gold purchases has slowed down, with net purchases of only 5 tons in January, less than 20% of the average monthly demand in 2025, losing important buying support.

3、 Market outlook: Short term bottom hunting, focus on policies and data

In the short term, the prices of gold and silver still face significant downward pressure, with a bearish trend in technical terms, and the 5-day, 10 day, and 20 day moving averages breaking levels across the board. The key support level below gold is focused on the $4300-4200 range, while silver is focused on the $64-62 range.

The medium-term trend depends on the subsequent policy movements of the Federal Reserve and the performance of economic data such as inflation and employment in the United States. If the subsequent inflation data continues to exceed expectations, the Federal Reserve may further release hawkish signals, and precious metal prices may continue to decline; If inflation shows signs of falling and expectations of interest rate cuts rise again, gold prices may experience a technical rebound.