Gold and silver investors’ heads are spinning from a series of highs and lows. After weeks of record-breaking rallies, both precious metals took a precipitous dip in price at the end of January, followed by a bounce in early February with single-day gains that rival those set during the 2008 financial crisis.
Gold reached a historic peak of $5,594.82 per ounce last week, then plunged on Friday and into Monday, hitting a $4,403.24 low before bouncing back to $4,895.69 on Tuesday morning.
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Silver had been riding high until a record 27% one‑day drop on Friday. It fell a further 6% on Monday, then catapulted up 8.6% to $86.30 an ounce as of Tuesday morning (1).
Starting to feel like numbers are swimming in front of your eyes, and you can’t keep up? You’re not alone.
Think of it this way: Precious metals are a cushion against market volatility. When times are tough — or just plain strange (are we going to war in Greenland?) — investors flee to the stability of gold and silver.
Why metal markets are going haywire
Here are just four (of many!) distinct causes of this recent rollercoaster ride in precious metal prices.
Geopolitics: The first factor, helping to drive weeks of record-high price increases in both silver and gold throughout January, is geopolitical instability. On Jan. 3, the United States invaded Venezuela, apprehending the nation’s president and sparking widespread outcry around the world.
Days later, President Trump and members of his inner circle began once again making public statements threatening to invade Greenland, an autonomous territory of the Kingdom of Denmark.
Eight European countries sent military personnel to Greenland to show support for Danish sovereignty. Trump threatened retaliatory tariffs on those countries, jeopardizing a trade deal struck after the last round of tariff threats in mid-2025.
Financial markets famously abhor uncertainty and chaos (nothing hampers global commerce like a war), and these events spurred investors to seek the relative safety of precious metals to weather the storm.
The threat of tariffs also tends to push the U.S. dollar down, as it is the main means of payment for international trade and the currency in which commodities are priced. When the U.S. dollar — traditionally a safe place to park your money — is wobbly, the safety of gold becomes more attractive, driving up the price (2).
In early February, investors turned their eyes to tensions between the U.S. and Iran as yet another reason to keep their money in metals (3).
Fed drama: The second factor, this one putting downward pressure on metal prices, is the impact of President Trump announcing a new pick for Federal Reserve chair, following his public clash with the outgoing one.
On Jan. 30, he nominated Kevin Warsh, a former Federal Reserve governor who served as an economic advisor to President George W. Bush. Markets saw this as a safe pick. Investors ditching the safety of gold and silver, causing their prices to fall, communicates a “vote of confidence” in the new chair, according to an analysis in The Conversation.
Concerns about the federal government interfering with the Fed’s independence also seemed to ease, and the U.S. dollar saw a bump (2).
Profit-taking: The third factor that pushed prices down is profit-taking: When an asset reaches frothy heights, some investors choose to sell to capture their gains, causing a dip in prices.
Backtracking: Gold and silver prices plunged precipitously at the end of January, and some investors judged gold and silver to be “oversold.” They then bought some back, helping prices to recover, one research analyst told Reuters (1).
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What this means for everyday Americans
Big swings in the precious metals markets impact you in several ways.
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Retirement accounts: Many 401(k)s and IRAs include precious metals exposure. According to U.S. News, advisors typically recommend allocating 2–5% of a portfolio to gold and other metals for diversification (4). Increased volatility means those holdings will swing more dramatically.
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Inflation hedging: Americans have traditionally viewed gold and silver as protection against currency devaluation. If instability in these markets persists, it may be time to have a conversation about other types of low-risk investments that can weather big swings in both the purchasing power of the dollar and the value of silver and gold.
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Consumer products: Swings in the price of silver affect production costs for everyday items like smartphones, as well as clean-energy technologies like solar panels (5). When mineral markets spike, those costs could eventually reach consumers.
The volatility ahead
Despite the dramatic swings, precious metals remain up substantially year-over-year. As of the morning of Feb. 4, gold is still trading just under $5,000 per ounce — more than triple the $1,550 price at the end of 2019, according to CNBC (6). Silver is trading at around $90 an ounce, compared to under $20 at the beginning of 2020 (7).
For investors, the lesson isn’t to panic sell (or panic buy). But these ups and downs do indicate that mineral markets could be entering a more volatile phase, where policy shifts can trigger sharp moves in either direction.
Reassessing how much exposure to precious metals makes sense should be based on your long-term goals, not short-term price moves.
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
CTV/Reuters (1); The Conversation (2); Investing.com (3); U.S. News (4); U.S. Geological Survey (5); CNBC (6, 7)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.