Gold, silver rebound after sharp sell-off: What's driving the turnaround

Gold and silver prices rose sharply on Tuesday (February 3), recovering part of the steep losses seen in the previous two sessions, as traders reassessed positions amid a lighter US data calendar, uncertainty from a partial government shutdown, and shifting expectations on Federal Reserve policy.

Spot gold climbed 3.7% to $4,837.16 per ounce, after touching a near one-month low in the prior session. US gold futures for April delivery rose 4.5% to $4,859.30 per ounce. Gold had hit a record high of $5,594.82 an ounce last Thursday (January 29) before a rapid correction knocked prices down by about 13% over two days.

Spot silver also advanced, rising 5.9% to $84.09 per ounce, following a much deeper pullback from its record high of $121.64 an ounce reached last week.

Why prices moved

Market participants said Tuesday’s rebound was driven more by position unwinding and technical recovery than a fresh shift in fundamentals.

The absence of the closely watched January US jobs report, which was delayed due to a partial government shutdown, reduced new economic signals and left markets more reactive to headlines and positioning flows.

The US dollar held onto gains, supported by positive economic readings and evolving expectations around Fed policy. A stronger dollar typically weighs on gold by making it more expensive for non-US buyers, but this effect was offset by broader macro uncertainty.

Investors continue to expect at least two Federal Reserve rate cuts in 2026, a backdrop that generally supports gold since the metal does not earn interest.

Separately, news of a US–India trade deal — involving lower US tariffs in exchange for changes in India’s trade and energy purchases — added to global policy developments being watched by commodity markets.

Structural outlook for gold

According to N S Ramaswamy, Head of Commodity & CRM at Ventura, the recent drop does not signal the end of gold’s longer-term uptrend.

He noted that:

• Central banks purchased 230 tonnes of gold in Q4 2025, and are expected to buy over 800 tonnes in 2026.


• ETF holdings have been rising, providing steady investment demand.


• Geopolitical and macro risks remain elevated, keeping gold relevant as a portfolio hedge.


• Physical demand remains strong, helping keep the market relatively tight.

Ramaswamy said the recent pullback reflected overextended positioning and speculative activity, rather than a fundamental shift. He expects gold to eventually move above the recent futures high of $5,645 an ounce in 2026, though with continued volatility along the way.

Why silver fell harder — and may recover slower

Silver’s correction was sharper than gold’s, largely because of higher leverage in the market.

An increase in margin requirements forced some traders to liquidate positions, accelerating the sell-off.

Ramaswamy expects silver to trade broadly in the $72–$78 an ounce range in the near term, with a clearer recovery signal only if prices break and sustain above $80 an ounce.

Over time, sustained higher prices could alter supply-demand dynamics and narrow the deficit that had previously supported silver’s rally.

-With agencies inputs