Gold & Silver Price Crash Wipes Out $4.02T in a Single Day

Gold and silver continue to slide sharply as of writing, extending losses from the weekend sell-off. Gold trades near $4,607 per ounce as of writing, down from a recent peak close to $5,600, while silver has fallen below $80 after hitting an all-time high of $121.64 last week of January. 

The latest leg lower erased roughly $4.02 trillion from the combined market value of gold and silver in a single day, deepening what traders now describe as a disorderly liquidation phase.

Record Highs Set the Stage for a Violent Reversal

Both metals entered February after historic rallies. Gold surged to record levels following months of steady gains, while silver posted its strongest advance in more than three decades. Technical indicators reflected extreme conditions, with relative strength index readings above 90 for both assets. 

When prices reached such stretched levels, markets became vulnerable. The sharp reversal that followed reflected how quickly momentum can flip after a prolonged melt-up.  That totals to over $10 trillion wiped out in just 3 days.

Gold is down over 20% from its peak, and has erased $7.4 trillion in market value, 5 times the entire market cap of Bitcoin. Silver, on the other hand, has crashed nearly 40% overall, wiping out over $2.7 trillion, which is equal to the entire crypto market cap.

Margin Hikes Trigger Cascading Liquidations

The most immediate catalyst came from futures markets. The CME Group raised margin requirements for gold and silver futures on February 2, sharply increasing the capital required to maintain positions. Many traders had built exposure using leverage ranging from 50x to 100x. 

Source: X

Once prices dipped, margin calls hit almost instantly. Forced selling accelerated as positions closed automatically, pushing prices lower in rapid succession.

Fed Leadership Shift Alters Market Psychology

At the same time, macro expectations shifted. U.S. President Donald Trump announced the nomination of Kevin Warsh as the next Federal Reserve Chair. Markets view Warsh as a policy hawk who favors a smaller Fed balance sheet and tighter financial conditions. 

The news strengthened the U.S. dollar and weakened demand for non-yielding assets such as gold and silver. Traders who relied on cheap funding moved quickly to cut exposure as rate sensitivity returned to focus.

Institutional Flows Deepen the Decline

Institutional selling added further pressure. Several major precious metals exchange-traded funds recorded steep intraday losses, with some funds dropping as much as 20% during the session. 

Large redemptions forced asset sales into a falling market, intensifying price moves. Across the broader metals complex, including platinum and palladium, total losses exceeded $9 trillion over a 36-hour window.

Volatility Spreads Across Correlated Markets

The crash unfolded against a wider risk-off backdrop. Investors reduced exposure across multiple asset classes as uncertainty rose around monetary policy and growth expectations. Technology stocks declined on concerns over heavy spending and stretched valuations, reinforcing defensive positioning. 

As correlations increased, traders cut hedge positions tied to inflation protection and liquidity risk, which amplified selling in precious metals.

Online sentiment mirrored the speed of the decline. Social media channels filled with disbelief as prices collapsed within hours. Some participants spoke of capital destruction, while others framed the move as an opportunity to buy weakness. Such reactions often accompany periods of extreme volatility, when rapid price changes feed emotional trading behavior.

What Comes Next for Gold and Silver?

With prices deeply corrected, attention now turns to technical levels and volatility signals. Gold trades at a key support zone between $4,400 and $4,500, an area reinforced by prior demand and volatility metrics. A hold above that level could open room for a short-term reversal. 

Source: DoubleEdge via X

A decisive break lower would signal continued downside risk. Silver traders now assess whether forced selling has run its course or whether further leverage remains to unwind. As markets stabilize, the next phase will depend on liquidity conditions, positioning, and policy expectations.