Gold Prices Stage Biggest Rally Since 2008

Gold and silver prices surged on Tuesday, with gold on track for its largest single-day gain since November 2008 as investors rushed back into precious metals following a historic two-day sell-off.

Spot gold climbed 4.9% to trade at $4,895.69 an ounce by 1120 GMT, rebounding sharply from a low of $4,403.24 hit on Monday. The metal’s price remains below the recent historic peak of $5,594.82 per ounce reached last week. U.S. gold futures for April delivery also saw strong buying, rising 5.7% to $4,918.10 per ounce.

Silver experienced an even more dramatic recovery, surging 8.6% to $86.3 an ounce. The rally comes after the metal posted a record 27% one-day drop on Friday, followed by another 6% decline on Monday.

What's Driving the Precious Metals Rebound?

Analysts suggest the sharp recovery is a technical rebound after prices became oversold. "The market was oversold after the announcement of U.S. President Donald Trump to nominate Kevin Warsh as the next Federal Reserve chairman. What we see today is a rebound," said Peter Fertig, an analyst at Quantitative Commodity Research.

Fertig added that traders who had previously sold to lock in profits are now re-entering the market. "You also see investors who have sold on profit taking are now regarding the prices as attractive again for buying," he explained.

The initial price slump was driven by two key factors. While investors believe potential Fed chair Kevin Warsh would favor rate cuts, they also anticipate he will tighten the central bank's balance sheet—a policy move that typically supports the U.S. dollar and pressures gold.

Pressure on prices was amplified when the CME Group raised margin requirements on precious metal futures, making it more expensive to hold leveraged positions.

Technical Outlook: Is the Bull Run Still Intact?

Despite the recent volatility, many analysts believe the long-term bull run for gold remains intact and expect the metal to hit new record highs later this year.

"Gold has now cleared its first retracement hurdle at $4,858, shifting focus toward $5,000 — the 50 per cent retracement of the latest slump," noted Ole Hansen, head of commodity strategy at Saxo Bank. For silver, Hansen identified the equivalent technical levels higher up at $90.58 and $96.52.

Adding a layer of uncertainty to the market, the U.S. Bureau of Labor Statistics announced on Monday that the January employment report, a critical economic indicator, would not be released this Friday due to the partial shutdown of the federal government.

Performance Across Other Metals

Other precious metals also saw significant gains on Tuesday.

• Spot platinum climbed 5.1% to $2,228.84 per ounce, recovering from a slide after hitting a record high of $2,918.80 on January 26.

• Palladium rose 4.5% to trade at $1,796.44.