Gold and Silver Stage Dramatic Comeback After Historic Crash
By John Nada·Feb 3, 2026·3 min read
Gold and silver rebound dramatically after a historic crash. Major banks remain bullish, but uncertainty looms over Chinese buyers' return.
Gold and silver staged a remarkable comeback on Tuesday after suffering a historic crash that erased weeks of gains. Gold jumped as much as 6.2% to near $4,950 per ounce, while silver surged over 10% above $87, driven by a weaker dollar and renewed risk appetite. The metals had previously soared in January, fueled by speculative momentum, geopolitical tensions, and concerns over the Federal Reserve's independence. Speculative positions from Chinese funds and Western retail investors contributed to this surge, bolstered by call-options buying and leveraged ETFs. However, a collapse during Asian trading on Friday saw silver experience its biggest daily drop ever, and gold faced its worst day since 2013.
Despite this chaos, major banks remain optimistic. UBS described the selloff as a healthy correction, creating better entry points for investors. Deutsche Bank maintained its bullish $6,000 gold target, though uncertainty lingers around whether Chinese buyers will return after the Lunar New Year, especially given China’s state banks tightening gold investment controls.
The rebound in gold and silver prices also prompted a rally in mining stocks. Endeavour Silver saw a 7.5% jump in premarket trading, while Coeur Mining added 7.7%. Hecla Mining and First Majestic Silver both surged around 8%. Analysts reassured investors that the selloff was merely a positioning reset, not indicative of a structural shift in the market. Deutsche Bank affirmed that the fundamentals for precious metals remain strong, despite the brutal 10% plunge in gold and a 30% wipeout in silver.
Alongside the precious metals recovery, another significant development unfolded in Washington. President Trump announced ‘Project Vault’—a $12 billion strategic mineral reserve aimed at breaking China’s grip on rare earth minerals. This initiative combines a record $10 billion Export-Import Bank loan with $1.67 billion in private capital to secure critical minerals essential for electric vehicles, semiconductors, and defense systems. More than a dozen companies, including GM and Google, are participating, with a focus on reducing price volatility and dependency on Chinese supply chains.
In other trade news, Trump revealed a tariff deal with India that cuts rates to 18% from 50%. However, critical details about the agreement are still missing. The deal requires India to halt Russian oil purchases and commit to buying over $500 billion in U.S. goods over five years. Indian markets reacted positively, with shares experiencing their best day in nine months and the rupee hitting its strongest gain since 2018. Yet, confusion persists, as neither government has released formal terms, and Indian refiners have not been ordered to stop Russian crude imports.
Back on the economic front, Richmond Fed President Tom Barkin defended the central bank's recent rate cuts, framing them as insurance to support the labor market amid ongoing inflation challenges. He acknowledged that inflation has remained above the target since 2021 and currently sits one percentage point too high. However, Barkin remains confident in the resilience of the economy in 2026, noting healthy demand and margins among businesses.
The recent fluctuations in gold and silver prices highlight the volatile nature of precious metals trading, especially under geopolitical and economic pressures. Investors will be watching closely to see if the current rebound can sustain momentum or if uncertainty will reignite fears in the market. The interplay between precious metals, trade policies, and economic indicators will be crucial for market direction in the coming weeks.