# Gold and silver sell-off gathers steam in correction after record highs

By Russ Mould — 2026-02-02

Russ Mould, investment director at AJ Bell, said: “Commodities markets have experienced a significant shockwave, with metal prices down sharply.

“This has reversed a winning trade for the plethora of commodity producers on the FTSE 100.

“Miners including Fresnillo and Antofagasta, and oil producers BP and Shell, were pulled into the red as investor sentiment towards their sectors wanes and earnings prospects are dampened as the prices of their goods have dropped sharply in a short space of time.

“Gold has now fallen 21 per cent from its $5,594 per ounce peak on January 29 to an intraday low of $4,403 per ounce.

“Silver has fallen by more, down 32 per cent since its year-to-date high less than a week ago. Copper and oil also fell in value.

“Many investors bought gold and silver as protection against the volatile geopolitical backdrop, yet they’ve learned the hard way these assets can also be volatile themselves.

“A lot of investors bought funds tracking baskets of gold and silver miners over the past year, believing that miners’ value rises by a greater amount than metal price appreciation.

“While that can be true, the same applies on the way down, with miners typically underperforming falling gold and silver prices.

“For example, between March and November 2022, when gold fell around 20 per cent, the S&P Commodity Producers Gold index of mining companies fell nearly 40 per cent.

“Equally, between October 2024 and the end of that year, when gold slipped around six per cent, the basket of gold miners was down nearly 18 per cent.

“There are many theories as to why gold and silver have fallen so dramatically in recent days.

“One is that metal prices went up too far, too fast, and we’re now seeing the market lose the froth and return to normality.

“Certain people bought gold because they were worried about a potential loss of Federal Reserve independence as Trump called for a much lower cost of borrowing.

“Trump surprised the market last week by nominating Kevin Warsh as the new Fed chair, an individual with hawkish tendencies and who might not favour rapid and sharp interest rate cuts.

“Having been weak for some time, the US dollar regained strength on his nomination.

“A stronger US dollar makes gold more expensive for buyers using other currencies, thus dampening its appeal.

“Warsh is also seen as having the qualities to help preserve the independence of the Fed, another relief for markets and another headwind for gold.

“There are other factors influencing commodity markets. Derivatives marketplace operator CME has raised margins on gold and silver futures, meaning anyone trading those assets will need to put up more collateral.

“This could force out speculators who cannot afford to put up more money as a deposit, potentially leading to contracts being closed and explaining why people might now be heading for the exit at the same time.

“The sharp sell-off in gold and silver-related assets threatens to weigh on investor sentiment globally.

“It also doesn’t help that the big tech stocks in the US have gone from being responsible for strong market gains to being the epicentre of worries around excessive spending.

“Wall Street futures imply a bad day for the tech-heavy Nasdaq index when US markets open later today.”

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