Hi, everyone, I'm Liz Ann Sonders, and this is the February Market Snapshot. In this short installment, I'll share some thoughts on the latest wild ride that gold and silver prices have been on. I have received an extremely elevated number of questions on the subject lately, so I thought this would be timely.

[High/low charts for "What goes up must come down?" for Gold and Silver are displayed]

So let's start with the charts of both gold and silver prices. These go back just six months, and they show intraday moves via hourly pricing. And as you can see, prior to the recent correction, prices for both metals had gone just parabolic.

[High/low charts for Gold and Silver charts from Jan. 16-Feb. 3 are displayed]

Now, I shortened the timeframe here to cover just the past three or so weeks, which is when the slope of the gains really kicked into higher gear, corresponding to a rash of questions we started to get from investors. At every client event I've done this year, the most commonly asked, and typically first questions were about whether investors should jump on the precious metals bandwagon, so to speak. I'm never a contrarian just to be a contrarian, but I will say that my antenna got up, and my answers have revolved around how one-sided the trades had become, and that it was clear that FOMO, fear of missing out, had become a driving force. As we often remind investors, FOMO is not an investment strategy. By the way, nor is panic.

[Performance percentages for Gold and Silver from Jan. 16-Feb. 3 are displayed]

Well, perhaps right on cue to that unbelievable enthusiasm, gold and silver prices started an about face. So what specifically were the drivers? That's what I've been asked more recently. Well, in sum, it was a combination of macro policy and market structure forces that all seem to hit at once, with silver, which has thinner liquidity and greater industrial usage, amplifying how gold has been performing.

Now, a recent volatility catalyst has been interest rate expectations and moves in the US dollar. Precious metals are highly sensitive to the path of real yields, so those are inflation-adjusted yields. Also sensitive to moves in the dollar. And when markets repriced recently the Fed path toward less easing than hoped, gold and silver began a quick descent. Now, when real yields move higher, the reason why it has that impact on an asset class like gold is real returns from bonds can exceed real returns from gold because gold doesn't have a yield, so it's just… your return is just driven by price movements.

Also related was the announcement by President Trump of his pick of Kevin Warsh for the position of Fed Chair. Now, Warsh has had shifting views over the years around the right path for monetary policy, including both on the rate side and the Fed's balance sheet side of the equation. However, the market's initial impression was that Warsh leans more hawkish than dovish, which did lead to some repricing of rate expectations, and a rebound in the dollar, which led many traders, and to some degree, investors, to rethink their gold and silver positioning.

In addition, and this is really important, leverage and "plumbing" have mattered more than usual. A lot of the recent price action has looked like positioning-driven air pockets, when futures-heavy investors got caught the wrong way, margin calls can force liquidations, and can sometimes turn orderly pullbacks into more waterfall-like declines. Related to all of that, after the initial plunge that started on January 29th, the CME Group raised margin requirements on both gold and silver futures. So what that did was likely mechanically flushed many of the more levered speculators, and caused that spike in volatility.

Now, prior to the correction, a driving force at play has been the fact that the bid underneath gold has been structurally strong, and to some degree fundamentally sound, including the benefit of global central bank buying. The World Gold Council reported exceptionally strong 2025 demand dynamics, including large exchange-traded fund inflows, and as I mentioned, continued global central bank buying. Then you had the kicker of the industrial demand for silver, and the imbalance between supply and demand, and that added fuel to the silver trade. Now, that strength in both of those precious metals can paradoxically make pullbacks sharper because there's more crowded long exposure to unwind, but it can also amplify rebounds because you get that buy the dip trading crowd that often steps back in.

Now, I probably should have said this upfront, we're not precious metals experts, but it is not a stretch I think at this stage to assume volatility could remain elevated; big swings in both directions, at times driven by macro data, at times driven by rate expectations, and at times driven by foreign exchange moves. That said, beyond those fundamental drivers, near-term price swings in both gold and silver may continue to be influenced as much by speculative positioning, margin levels, ETF flows, momentum signals, and headlines. This implies that even if the broader fundamental backdrop remains constructive, short-term price spikes and pullbacks could remain frequent, especially for silver, which is often seen as "gold on steroids."

[List of "Takeaways" is displayed]

So in sum, think risk management, not price forecasting when it comes to precious metals. With macro data and rate expectations uncertain, and positioning being a key factor, gold and silver are arguably not trading as much like slow moving stores of value, and more on speculation.

Now, structural support is real, as I mentioned, especially for gold. But rallies have been getting sold as a lot of this positioning gets unwound, while silver has been behaving like gold, but with elevated leverage. What I would say to keep an eye on is watch the combination of the dollar and real yields first, and maybe headlines second. Gold may still work as a strategic diversifier, but in the near-term it should be treated more as a volatile macro asset, not a sleepy, safe haven, and think of silver as its high-beta cousin.

Thanks, as always, for tuning in, and we'll be back next month.

[Disclosures and Definitions are displayed]