The gold market is undergoing one of its most severe corrections in history. A dramatic sell-off that began with the largest single-day loss since 1983 on Friday accelerated further at the start of the week. Prices for the precious metal have now retreated more than $1,000 from their recent all-time high near $5,595 per ounce, driven downward by a confluence of shifting monetary policy expectations and decisive regulatory action from exchanges.

A Dual Catalyst for the Sell-Off

Market analysts point to two specific events that triggered the wave of selling pressure. First was the announcement by Donald Trump nominating Kevin Warsh as the new head of the Federal Reserve. Warsh is widely viewed as a monetary policy hawk, expected to pursue inflation more aggressively than the current chair, Jerome Powell. This development has dampened market hopes for substantial interest rate cuts, strengthening the U.S. dollar and applying significant pressure to non-yielding gold.

The second catalyst arrived over the weekend when the CME Group implemented substantial increases in margin requirements for futures contracts. The move forced speculative investors holding leveraged positions to either commit more capital or conduct forced liquidations to meet the new requirements. These mandatory sales served to amplify and accelerate the downward momentum in prices.

Should investors sell immediately? Or is it worth buying Gold?

Key Market Data

• Gold declined an additional 3-6% on Monday, following a 9% drop this past Friday.
• The price traded between $4,565 and $4,713 per ounce during the session.
• Silver also experienced a sharp decline, falling a further 12% to $74 per ounce.
• CME margin requirement adjustments: Gold increased from 6% to 8%; Silver increased from 11% to 15%.

Divergent Views from Major Institutions

Despite the extreme volatility, some major banks are maintaining a longer-term constructive outlook. J.P. Morgan continues to hold a bullish stance, reiterating its year-end price target range of $6,150 to $6,500. The bank’s analysis frames the current plunge as a technical correction following gold’s double-digit rally in January.

From a chart perspective, the $4,405 level is now being watched as a critical technical support zone. A sustained hold above this price could pave the way for market stabilization. However, a decisive break below it may trigger another wave of selling, potentially targeting the $4,000 level. Deutsche Bank analysts also express long-term optimism, citing a $6,000 price target.

The current period of extreme price swings reflects a market in the process of reassessing the landscape under the prospective leadership of Fed nominee Warsh. Near-term risk remains elevated due to the potential for further forced liquidations. The coming weeks will reveal whether gold’s fundamental investment thesis—rooted in inflation concerns, sovereign debt levels, and geopolitical tensions—can ultimately outweigh the market’s rapid repricing of monetary policy.

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