Gold surges back above $5,000 as dip buyers charge back in after historic bloodbath

• Gold rebounds above $5,000 per ounce as buyers rush in after a brutal wipeout.
• Analysts say the plunge was driven by crowded trades, not weak fundamentals.
• Silver stays volatile as its smaller market amplifies price swings.

Gold bounced above $5,000 an ounce on Tuesday as investors rushed back into the metal following one of the sharpest selloffs in decades.

Spot gold was trading around $5,072 per troy ounce at 11:10 p.m. ET on Tuesday, extending gains from the previous session, when prices jumped more than 6%.

"The recovery in metals coincided with a broader improvement across financial markets," wrote Ewa Manthey, a commodities strategist at ING, adding that the rebound also came as the US dollar gave back some of its earlier gains from the initial phase of the sell-off.

The reversal came after a brutal collapse in gold prices on Friday and Monday, following a record high above $5,500 per troy ounce on Thursday.

The selloff was magnified by President Donald Trump's nomination of Kevin Warsh as the next Federal Reserve chair. Warsh is widely viewed as the most hawkish candidate, which drove the US dollar sharply higher and sparked aggressive profit-taking in gold.

However, the drawdown was already underway in what had become a crowded trade, with market mechanics accelerating the move lower.

"The move was largely fueled by a wave of speculative buying from China, from retail traders to larger equity funds rotating into commodities, with fresh flows pushing prices to extreme levels before last week's abrupt reversal," wrote Manthey.

Western call options — contracts that give investors the right to buy gold at a set price and are often used to hedge geopolitical and global macro risks — also played a central role in amplifying the rally, analysts at Goldman Sachs wrote in a note on Tuesday.

That demand faded after Warsh's nomination, triggering a wave of technical selling that cascaded into system-wide losses.

Many analysts still see further upside for gold, arguing that the selloff reflected positioning rather than a deterioration in fundamentals. Key drivers include geopolitical risks, haven demand, and central bank buying.

Goldman forecasts gold at $5,400 per ounce by this December.

Silver is likely to stay volatile

Silver's market dynamics are more extreme.

Silver prices also advanced on Tuesday after a 36% plunge on Friday and a sharp additional drop on Monday. Prices had reached record levels above $121 per ounce on Thursday.

Spot silver was trading around $87.50 per ounce at 11:09 p.m. ET on Tuesday.

"Silver is often nicknamed 'gold on steroids' — it tends to move much more than gold in percentage terms. Its smaller market size and exposure to both investment and industrial demand tend to amplify price moves in both directions," wrote Manthey.

Manthey added that silver prices are likely to remain volatile as the white metal is more sensitive to shifts in sentiment and positioning than gold.

That's even as medium-term industrial demand continues to underpin the silver market amid tight supplies in London, the hub of global silver trading.

"The persistent London liquidity squeeze adds an additional layer of extreme price behavior on top of the same call‑structure‑driven volatility seen in gold," wrote the Goldman analysts.