Investors in precious metals are finding relief following the most severe price collapse in over four decades. On Tuesday, gold recorded its largest single-day gain since the 2008 financial crisis, powering its way back toward the psychologically significant $5,000 threshold. This dramatic recovery raises a critical question for the market: does it signal a true return to a bull market, or is it merely a technical rebound within a volatile trading environment?

A Dramatic Shift in Sentiment

The trading week began with a stark reversal in market mood. After Friday’s plunge, which saw gold drop nearly 10% and silver crater by approximately 30%, investors swiftly moved to buy the dip. The spot price surged roughly 6% on Tuesday, bringing it within striking distance of $5,000. Despite the recent violent correction, the precious metal remains up 13.79% since the start of the year.

The preceding sell-off was triggered by a confluence of monetary policy concerns and market mechanics. On Friday, US President Donald Trump nominated Kevin Warsh to succeed Jerome Powell as Federal Reserve Chair starting in May 2026. Perceived as a monetary policy “hawk,” Warsh’s nomination immediately stirred market fears of less aggressive interest rate cuts. Simultaneously, exchange operator CME Group raised margin requirements for precious metal futures contracts, forcing many speculative traders to liquidate their positions.

Underlying Strength Amid the Chaos

Market observers interpret the current recovery as evidence that the long-term investment thesis for gold remains sound. Analysts at ING and UBS have characterized the pullback as a “healthy correction” following a parabolic rally that saw gold hit an all-time high of $5,450.00 on January 28. The current price sits just over 9% below that peak.

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

The fundamental drivers for ownership persist unchanged. Geopolitical tensions and ongoing uncertainty regarding US trade policy continue to fuel demand for safe-haven assets. Furthermore, global central banks are aggressively diversifying their reserves away from the US dollar. In 2025 alone, official institutions purchased 863 tonnes of gold, while investment demand jumped to a record 2,175 tonnes.

Major Banks Maintain Bullish Outlook

Leading investment banks are expressing optimism despite the recent turbulence. JPMorgan has even raised its price target for year-end to $6,300. Experts at Deutsche Bank also see no indications of a sustained downward trend reversal. The massive inflows into gold-backed ETFs—2025 was the second-strongest year on record—buttress the case for continued institutional interest.

• Price Recovery: Closing at $4,940.90 on Tuesday, the metal reclaimed a significant portion of recent losses.
• Extreme Volatility: The steepest decline since 1983 on Friday was followed by the most powerful rally in 18 years.
• Catalysts Identified: The sell-off was driven by a new Fed Chair nomination and higher margin requirements.
• Long-Term Forecast: Analysts believe core drivers are intact, with price targets calling for moves as high as $6,300.

Investors should, however, prepare for continued volatility. With annualized volatility exceeding 41%, price swings are expected to remain extreme. Market focus now shifts to the future direction of US monetary policy under Kevin Warsh. As long as real economic and political uncertainties persist, any significant price decline is likely to be met with eager buying interest, as the recent rebound demonstrates.

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