Precious metals markets saw a comprehensive sell-off last Friday. Regarding the reasons for the sell-off, institutional views suggest that although Kevin Warsh's nomination for Federal Reserve Chair triggered changes in expectations for Fed policy, the more primary reasons behind it may still lie in liquidity pressures and position adjustments. The fundamentals of precious metals have not changed currently, and coupled with the significant increase in silver ETF positions on Monday, it seems to indicate the market's confidence in precious metals.

Rhona O'Connell, Head of Market Analysis for Europe, the Middle East, Africa and Asia-Pacific at StoneX, stated that the sharp sell-off in the metals market last Friday was also one of the largest liquidity crisis events in market history, triggered by the market's sudden formation of a clear expectation regarding the future policy direction of the Federal Reserve. "A significant uncertainty at the financial and political levels has been eliminated.

Commodity analysts at Societe Generale also stated that the decline in metal prices last Friday was not a simple correction, but rather a deleveraging situation. Such extreme price fluctuations are sufficient to indicate that this was not driven by fundamental factors, but by position adjustments. The trigger was Trump's nomination of Kevin Warsh as the next Chairman of the Federal Reserve, which injected certain bullish momentum into the US dollar. At the same time, since gold and silver had been in an extremely overbought state before, in a market environment with low liquidity, only a little incentive was needed to trigger large-scale sell-offs. However, when talking about the later trend, analysts at Societe Generale said that although the uncertainty caused by the chaos at the institutional level of the Federal Reserve has been eliminated, the fundamental logic supporting the rise in precious metal prices has not changed, and "a correction may instead be positive.

Everbright Futures' latest view also holds that in just two trading days, the precious metals market has experienced huge fluctuations of a "historic plunge", which is also a mandatory liquidation in the form of "squeezing bubbles and reducing leverage" in response to the previous extreme overbuying and overly crowded trading. However, it should be pointed out that the long-term core variables supporting precious metals (such as the restructuring of the US dollar credit system, the trend of de-dollarization in reserves, and the normalization of geopolitical rifts) have not reversed, and the long-term driving logic remains intact. After this round of sharp adjustments, gold may enter a phase of moderate fluctuations, and it will take more time to digest before continuing to rise to challenge new highs.

It is worth noting that after the record-breaking plunge in the prices of precious metals, especially silver, on February 2, the silver holdings of the world's largest silver ETF, iShares Silver Trust, increased by 1,023.23 tons in a single day. The total holdings surged from 15,523.36 tons in the previous trading day to 16,546.59 tons, fully making up for the continuous reduction in holdings of this ETF since January 21.

Against this backdrop, domestic precious metals also generally rebounded after opening on the 3rd. Among them, the main contract of Shanghai Silver opened its limit-down, and the main contract of Shanghai Gold rose rapidly. The daily decline narrowed from more than 3% at the close of the night session on the 2nd to less than 1%.

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