Precious metals are experiencing a dramatic price swing, like climbing stairs only to descend an elevator. After a speculative frenzy, a bloodbath ensued, with gold standing out against the headwinds while silver and platinum are mired in losses.
2026-02-19 08:44:11
The precious metals market has once again witnessed a classic "staircase rise, elevator fall" drama. January saw a across-the-board surge to record highs, only to plummet in February with a sharp correction, exhausted momentum, and increased volatility, plunging the entire sector into a period of unclear consolidation. As Ross Norman, CEO of Metals Daily, succinctly pointed out, speculators are truly in the driver's seat. While institutions have a strong affinity for gold, the entire precious metals complex remains driven by speculative capital, rather than fundamentals.
Norman observed that the familiar pattern of precious metal prices slowly climbing only to crash instantly was repeating itself. January saw a dramatic surge across the entire sector, with many commodities hitting new all-time highs; however, February brought a sharp correction, a brief rebound, and a rapid exhaustion of momentum, before the market returned to high-frequency fluctuations. In particular, the trading in derivatives markets of major Asian countries had an unusually amplifying effect on prices, with many fluctuations completely deviating from actual supply and demand fundamentals. Norman bluntly stated: "The market is becoming increasingly difficult to navigate and understand."
In such an extremely volatile environment, retail investors are most likely to get burned and forced out of the market, institutional funds choose to temporarily withdraw and observe, industrial end-users scramble to find alternative materials, and central banks also press the pause button. Speculators are ultimately left only to gamble against each other, creating a completely zero-sum game. Norman lamented: This does nothing to help the long-term healthy development of the market.
According to traditional technical analysis, after any significant decline, a retracement of about 50% is typically needed to confirm the continuation of a bull market trend. However, most precious metals have only seen partial rebounds, stalling at key resistance levels and subsequently entering a sideways trading range. Norman describes this situation as a "yellow light warning": for bulls, the speed of the rebound is encouraging, especially given the strong US economic data, a stronger dollar, and delayed expectations of a Fed rate cut; but for bears, the retracement is still insufficient to declare a top.
Gold has been the most outstanding performer across the board, successfully breaking through the 50% retracement threshold and currently only about 12% below its recent high. Norman emphasizes that gold is supported by multiple strong structural factors: continued large-scale gold purchases by central banks, the global trend of de-dollarization, and rising sovereign debt concerns remain unshaken. Physical demand is also booming, with gold bar showrooms in the UK, Europe, and Asia reporting "overwhelming" interest; while the Indian premium has declined somewhat due to high prices, it remains near a ten-year high; and although seasonal demand in China has slowed slightly, it remains resilient.
Continued strong physical demand in Asia further confirms that the broader precious metals bull market remains structurally intact. While short-term prices are driven by speculative funds and exchange margin adjustments, the long-term trend remains unchanged.
In contrast, silver has been the weakest performer in this round of correction, currently down about 38% from its all-time high of $122/ounce reached in January. Its explosive 60% surge in January was almost entirely driven by speculation, significantly outpacing fundamentals, making it particularly vulnerable to the deleveraging wave. Fortunately, the recent sharp sell-off has cleared out most of the Chinese speculative positions on the Shanghai Gold Exchange.
However, Norman cautions that despite six consecutive years of global silver supply deficits and strong industrial and jewelry demand, short-term prices remain severely disconnected from these fundamentals. Even more exciting is the quietly emerging technological revolution: if solid-state batteries mass-produced by giants like Samsung cover approximately 10% of cars by 2035, and each car uses 1 kilogram of silver, this will generate an additional demand for 6,000 to 8,000 tons of silver, equivalent to a quarter of global annual mine production. This means that silver's medium- to long-term potential remains enormous.
Meanwhile, extreme volatility has made end users wary. Pandora, the world's largest jeweler, has begun shifting to platinum-plated products to reduce its reliance on silver.
Platinum surged nearly 50% in January, briefly approaching the $3,000/ounce mark, but then erased all of its 2026 gains in the following weeks and continued its downward trend. Norman points out that, like other precious metals, platinum is suffering from speculator fatigue and a simultaneous sell-off in hard assets. While fundamentals such as tight supply, spot premiums, and high leasing rates remain favorable, macroeconomic factors and deleveraging in derivatives—especially the significant increase in global margin requirements on exchanges like GFEX—have completely dominated the market. Industrial clients are finding it almost impossible to conduct effective production planning during this "lottery-like" volatility.
Palladium also rose by about 36% in January, but gave back all of that in early February. It is currently basically flat year-to-date, hovering in the range of $1,650-$1,700 per ounce. On the demand side, it has benefited from increased production of hybrid vehicles and industrial applications such as AI, electronics, and catalysts, which have increased by about 5% year-on-year. On the supply side, however, it has contracted by about 3% due to production disruptions in South Africa and reduced production at North American mines, which can only be partially offset by recycling.
Norman's core conclusion is that, in the short term, speculators, rather than fundamentals, continue to firmly control the direction of the precious metals market. Large speculative positions, sharp adjustments to initial margin requirements at futures exchanges, stop-loss triggers, the resilience of the US economy (strong employment data delaying interest rate cuts until summer), and a strong dollar have all collectively suppressed genuine supply and demand signals.
For long-term investors, fundamentals are becoming increasingly important, and the logic of a structural bull market has not broken down; but for nervous short-term traders, Norman offers advice: you must get used to the harsh reality of being "technically correct, financially unprofitable... and frequently stopped out."
Gold's relative resilience highlights the firm conviction of institutional investors; while the more dramatic declines and weak rebounds in silver and platinum are a direct reflection of the forced liquidation due to excessive leverage.
Physical indicators, particularly Asian demand, suggest that the structural bull market for precious metals remains intact, but recurring flash crashes are gradually eroding the enthusiasm of a wider range of investors. Norman concludes by pointing out that the upcoming US inflation data is likely to be the most important catalyst in determining the direction of the market in the next phase.
The precious metals market is at a critical juncture, with speculation and fundamentals locked in a fierce tug-of-war. Short-term volatility may continue to test investors' resolve, but as long as Asian physical demand remains strong, central bank gold purchases continue, and structural contradictions remain unresolved, a larger bull market wave will eventually return. Smart long-term capital is quietly positioning itself at the bottom of the "elevator"; while speculators who only chase trends may have to pay the price for the next "elevator ride."
At 08:42 Beijing time, spot gold was trading at $4967.81 per ounce.
The "staircase and elevator" vicious cycle in price trends
Norman observed that the familiar pattern of precious metal prices slowly climbing only to crash instantly was repeating itself. January saw a dramatic surge across the entire sector, with many commodities hitting new all-time highs; however, February brought a sharp correction, a brief rebound, and a rapid exhaustion of momentum, before the market returned to high-frequency fluctuations. In particular, the trading in derivatives markets of major Asian countries had an unusually amplifying effect on prices, with many fluctuations completely deviating from actual supply and demand fundamentals. Norman bluntly stated: "The market is becoming increasingly difficult to navigate and understand."
In such an extremely volatile environment, retail investors are most likely to get burned and forced out of the market, institutional funds choose to temporarily withdraw and observe, industrial end-users scramble to find alternative materials, and central banks also press the pause button. Speculators are ultimately left only to gamble against each other, creating a completely zero-sum game. Norman lamented: This does nothing to help the long-term healthy development of the market.
Technical indicators are flashing a warning sign, and disagreements remain between bulls and bears.
According to traditional technical analysis, after any significant decline, a retracement of about 50% is typically needed to confirm the continuation of a bull market trend. However, most precious metals have only seen partial rebounds, stalling at key resistance levels and subsequently entering a sideways trading range. Norman describes this situation as a "yellow light warning": for bulls, the speed of the rebound is encouraging, especially given the strong US economic data, a stronger dollar, and delayed expectations of a Fed rate cut; but for bears, the retracement is still insufficient to declare a top.
Gold stands out, solidifying the foundation of the structural bull market.
Gold has been the most outstanding performer across the board, successfully breaking through the 50% retracement threshold and currently only about 12% below its recent high. Norman emphasizes that gold is supported by multiple strong structural factors: continued large-scale gold purchases by central banks, the global trend of de-dollarization, and rising sovereign debt concerns remain unshaken. Physical demand is also booming, with gold bar showrooms in the UK, Europe, and Asia reporting "overwhelming" interest; while the Indian premium has declined somewhat due to high prices, it remains near a ten-year high; and although seasonal demand in China has slowed slightly, it remains resilient.
Continued strong physical demand in Asia further confirms that the broader precious metals bull market remains structurally intact. While short-term prices are driven by speculative funds and exchange margin adjustments, the long-term trend remains unchanged.
Silver suffered a severe "market shakeout," but long-term explosive potential lies hidden beneath the speculative bubble.
In contrast, silver has been the weakest performer in this round of correction, currently down about 38% from its all-time high of $122/ounce reached in January. Its explosive 60% surge in January was almost entirely driven by speculation, significantly outpacing fundamentals, making it particularly vulnerable to the deleveraging wave. Fortunately, the recent sharp sell-off has cleared out most of the Chinese speculative positions on the Shanghai Gold Exchange.
However, Norman cautions that despite six consecutive years of global silver supply deficits and strong industrial and jewelry demand, short-term prices remain severely disconnected from these fundamentals. Even more exciting is the quietly emerging technological revolution: if solid-state batteries mass-produced by giants like Samsung cover approximately 10% of cars by 2035, and each car uses 1 kilogram of silver, this will generate an additional demand for 6,000 to 8,000 tons of silver, equivalent to a quarter of global annual mine production. This means that silver's medium- to long-term potential remains enormous.
Meanwhile, extreme volatility has made end users wary. Pandora, the world's largest jeweler, has begun shifting to platinum-plated products to reduce its reliance on silver.
Platinum group metals experienced sharp fluctuations, with fundamental support overwhelmed by speculation.
Platinum surged nearly 50% in January, briefly approaching the $3,000/ounce mark, but then erased all of its 2026 gains in the following weeks and continued its downward trend. Norman points out that, like other precious metals, platinum is suffering from speculator fatigue and a simultaneous sell-off in hard assets. While fundamentals such as tight supply, spot premiums, and high leasing rates remain favorable, macroeconomic factors and deleveraging in derivatives—especially the significant increase in global margin requirements on exchanges like GFEX—have completely dominated the market. Industrial clients are finding it almost impossible to conduct effective production planning during this "lottery-like" volatility.
Palladium also rose by about 36% in January, but gave back all of that in early February. It is currently basically flat year-to-date, hovering in the range of $1,650-$1,700 per ounce. On the demand side, it has benefited from increased production of hybrid vehicles and industrial applications such as AI, electronics, and catalysts, which have increased by about 5% year-on-year. On the supply side, however, it has contracted by about 3% due to production disruptions in South Africa and reduced production at North American mines, which can only be partially offset by recycling.
Speculators are at the helm, while long-term investors await the fundamentals to return to normal.
Norman's core conclusion is that, in the short term, speculators, rather than fundamentals, continue to firmly control the direction of the precious metals market. Large speculative positions, sharp adjustments to initial margin requirements at futures exchanges, stop-loss triggers, the resilience of the US economy (strong employment data delaying interest rate cuts until summer), and a strong dollar have all collectively suppressed genuine supply and demand signals.
For long-term investors, fundamentals are becoming increasingly important, and the logic of a structural bull market has not broken down; but for nervous short-term traders, Norman offers advice: you must get used to the harsh reality of being "technically correct, financially unprofitable... and frequently stopped out."
Gold's relative resilience highlights the firm conviction of institutional investors; while the more dramatic declines and weak rebounds in silver and platinum are a direct reflection of the forced liquidation due to excessive leverage.
Physical indicators, particularly Asian demand, suggest that the structural bull market for precious metals remains intact, but recurring flash crashes are gradually eroding the enthusiasm of a wider range of investors. Norman concludes by pointing out that the upcoming US inflation data is likely to be the most important catalyst in determining the direction of the market in the next phase.
Conclusion
The precious metals market is at a critical juncture, with speculation and fundamentals locked in a fierce tug-of-war. Short-term volatility may continue to test investors' resolve, but as long as Asian physical demand remains strong, central bank gold purchases continue, and structural contradictions remain unresolved, a larger bull market wave will eventually return. Smart long-term capital is quietly positioning itself at the bottom of the "elevator"; while speculators who only chase trends may have to pay the price for the next "elevator ride."
At 08:42 Beijing time, spot gold was trading at $4967.81 per ounce.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
