Gold prices crash but long-term outlook remains positive

Gold plunged 12% below $5,000/oz after rally, driven by stronger dollar and Fed shifts, but long-term outlook stays positive with demand support

Gold prices, which had surged to record highs earlier in the week, witnessed a sharp correction, falling nearly 12 percent and slipping below $5,000 an ounce after touching $5,600. The sudden crash followed a wave of profit‑taking in global markets, triggered by developments in US monetary policy.

Precious metals have long been considered a safe haven during periods of uncertainty. Investors had flocked to gold and silver amid rising geopolitical tensions, trade war concerns, and speculation over interest rate movements. However, the nomination of Kevin Warsh as the next chair of the US Federal Reserve sparked a rally in the US dollar and higher real yields, leading to heavy selling in gold and silver.

The correction was amplified by leveraged positions that had built up during the recent rally. Market analysts described the fall as a typical euphoria‑to‑exhaustion phase, where overextended trades are liquidated rapidly. Despite the steep decline, experts do not view this as the start of a structural bear market.

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Central banks worldwide continue to accumulate gold at record levels, reinforcing its role as a store of value. At the same time, silver is supported by structural supply deficits and rising industrial demand from sectors such as renewable energy, electric vehicles, artificial intelligence, and electronics. These factors are expected to underpin a long‑term bullish bias in precious metals.

Looking ahead, the outlook for gold remains mixed in the near term, with volatility likely to persist as markets adjust to shifts in US monetary policy. However, the combination of central bank buying, industrial demand, and global uncertainty suggests that gold and silver will continue to play a critical role in investor portfolios, offering resilience against financial risks.

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