The international financial markets will enter a period of deep volatility in 2026

International Gold and Silver Prices Experience Sharp Fluctuations, Multiple Countries’ Forex and Stock Markets Ride the Roller Coaster

The Global Financial Markets Enter a Deep Volatility Period in 2026

Reporter | Ji Xiaoli, China Development Reform News Agency

Recently, the prices of precious metals have attracted a large influx of speculators. On January 29, international gold and silver prices staged a “roller coaster” ride, both reaching high levels before plummeting, with the decline continuing into early February.

Affected by factors such as a decline in risk appetite and a softening dollar index, international gold and silver prices continued to rebound on February 2, with gold prices hitting their largest single-day increase since 2009 on February 3. In subsequent overnight trading, gold and silver futures prices continued to rebound, with gold prices once again surpassing $5,000 per ounce.

Analysts believe that changes in global liquidity expectations, Federal Reserve personnel shifts, and highly concentrated speculative positions have caused gold and silver prices to fluctuate. In addition to precious metals, volatility in foreign exchange markets and stock markets in multiple countries is also intensifying. The market is still reassessing risk appetite, and this wave of volatility may persist in the short term.

Sharp Fluctuations and Adjustments in International Gold and Silver Prices

On January 29, the April gold futures price on the New York Mercantile Exchange briefly reached $5,626.80 per ounce in the morning session, and the March silver futures price briefly hit $121.785 per ounce. Subsequently, the market experienced a sudden sharp sell-off, with gold prices dropping $380 in just 28 minutes, a nearly 7% decline, and silver prices plunging 11% during the same period. On February 2, the April gold futures price on the US NYMEX fell to $4,429.2 per ounce, and the March silver futures price briefly dropped to $72.35 per ounce. The global market capitalization of gold and silver shrank by over $3 trillion. However, in the following overnight trading, gold and silver futures prices rebounded significantly, rising over 4% and 9%, respectively.

On January 30, the Chicago Mercantile Exchange announced an increase in margin requirements for metal futures, effective after the close on February 2. Higher capital requirements would suppress speculative participation and reduce liquidity, forcing traders to close positions. Previously, global bullish sentiment was highly synchronized, leading to a large backlog of profit-taking positions. When prices broke through key technical support levels, automatic stop-loss orders were triggered en masse, increasing market sell-offs and causing a cliff-like decline in gold and silver prices in a short period.

Consulting firm Roland Berger pointed out in a report that silver’s market depth and support from global central bank reserves are far less than gold, making it highly susceptible to “destructive” liquidations during tightening liquidity conditions. When assets are overhyped and diverge from their safe-haven nature, they become the biggest risk points themselves.

During this process, international institutional funds underwent structural adjustments. Data from the US Commodity Futures Trading Commission shows that several major international commercial banks significantly reduced their net long positions in gold and silver before and after the sharp price fluctuations, preferring to lock in profits. Goldman Sachs mentioned in an industry briefing that large hedge funds had begun hedging their long positions just before the crash. When market sentiment shifted, these institutions used algorithmic trading to quickly reverse their positions, while retail investors lacking risk control measures were forced to become liquidity providers.

Changes in market expectations for the dollar’s trend are another major reason for recent gold and silver price swings. On January 30, US President Trump announced the nomination of former Federal Reserve Board member Kevin Warsh as the next Fed Chair. Since Warsh has repeatedly emphasized the importance of price stability and a strong dollar, investors generally expect the dollar to appreciate in the future. If US interest rates remain high, it will put heavy pressure on gold and silver prices, which do not generate interest income. After the nomination was announced, the dollar index briefly rebounded, the 10-year US Treasury yield rose, and funds flowed out of precious metals into US Treasuries.

Global financial broker XS.com stated in a report: “The future trend of gold will not depend on a single variable like interest rates or the dollar but on the overall stability of the global monetary and fiscal framework.” Most institutions remain optimistic about gold’s prospects, believing that under the backdrop of ongoing geopolitical risks and other supporting factors, gold will continue to serve as a means of risk diversification and hedging against market uncertainties. However, they caution against blindly chasing gains or panic selling.

Federal Reserve Chair Nomination Triggers a “Chain Reaction”

The future of gold and silver prices is linked to the monetary policy the Fed will implement. As market speculation about the new Fed Chair’s policy stance grows, a “butterfly effect” continues to expand.

If approved by the US Senate, Warsh will succeed Jerome Powell, whose term ends in May this year. As a critic of the Fed, Warsh is expected to push for reforms similar to those of several Trump administration officials. Due to his close relationship with Trump, there are concerns about whether he can maintain the Fed’s independence.

According to media reports, Warsh’s billionaire father-in-law, Ronald Lauder, was a classmate of Trump at the University of Pennsylvania’s Wharton School and donated $5 million to Trump’s super PAC in March 2025. Trump admitted on January 30 that he has known Warsh for a long time. In July 2025, Warsh criticized the Fed’s hesitation to cut interest rates in an interview with US Consumer News & Business Channel, calling for “systemic reform” in policy implementation; in the same month, he told Fox Business that the Fed needs closer cooperation with the US Treasury.

Warsh has long publicly supported globalization and free trade, criticizing the Fed’s loose monetary policy since the financial crisis. Recently, however, he has shifted to support Trump’s tariffs and calls for faster rate cuts. According to Reuters, Warsh hopes to shrink the Fed’s balance sheet and relax bank regulations, which differs from the usual “pause or expand” during rate-cutting cycles. Overall, market expectations of a “hawkish” stance from Warsh have strengthened the dollar on January 30, with long-term Treasury yields remaining strong and short-term yields declining, leading to a sharp correction in precious metals prices.

Meanwhile, the US Department of Labor announced on January 30 that the December 2025 core Producer Price Index (PPI) and the annual PPI both exceeded expectations, indicating that inflation is gradually becoming embedded in the US economy. This reduces the urgency for rate cuts and may force the Fed to maintain a “neutral” monetary policy for the long term, which is negative for gold prices.

Philip Shio, Chief Economist at UK Tenda Bank, believes that the US fiscal situation remains unsustainable. Nomination of Warsh does not necessarily mean Trump will stop intervening in the Fed or other US government departments. Moreover, whether Warsh’s nomination will be approved by the US Senate remains uncertain. After Jerome Powell was subject to criminal investigation by the US Department of Justice, several Republican lawmakers publicly expressed doubts or criticism. Some Republican senators reportedly said they would oppose any Fed-related nominations until this issue is resolved.

Therefore, the US Federal Reserve’s upcoming monetary policy direction remains uncertain and could influence international financial markets at any time.

Global Financial Markets in Turmoil, Capital Reallocation Resumes

Behind the Fed’s enormous influence is the US dollar’s credit backing. Recently, originating from New York, a game over monetary credit has spread across global financial markets.

Recently, the euro exchange rate against the dollar broke through the 1.0 mark, returning to a four-year high, reflecting the “migration” of global capital seeking safe havens. In 2021, the implementation of European integrated fiscal stimulus policies and the positive outlook for the eurozone economy, along with a gradual recovery in global trade, supported the euro’s appreciation as a “trend with the fundamentals.” However, by 2026, despite the eurozone’s economic growth expectations remaining sluggish and inflation still needing stabilization, the euro/dollar exchange rate has recently risen from 11.16 to over 11.20 in the past two weeks.

For years, the US dollar has dominated international trade settlement, global foreign exchange reserves, and bond issuance. Every basis point movement in the dollar exchange rate affects trillions of dollars in trade costs and asset valuations. Since 2025, due to US military strikes on multiple countries, openly “withdrawing” from international organizations, imposing “reciprocal tariffs” on over a hundred countries and regions, and openly intervening in Fed policies, global asset allocation has begun to subtly shift. Investors now place greater emphasis on institutional certainty and policy stability. The dollar’s risk premium has soared, prompting some international traders to consider the euro as a safe haven. In 2025, the euro/dollar exchange rate rose from about 11.02 to around 11.18.

However, in early February, following the plunge in gold and silver prices, the dollar index measuring the dollar against six major currencies strengthened again on February 2, rising by another 0.67%, closing at 97.635 at the end of the forex trading day.

The strengthening and weakening of the dollar, with increasing amplitude, greatly stirs the waves in international financial markets, affecting Asian markets as well.

In January, the Japanese yen experienced a roller coaster, from sharp decline to rapid appreciation. On January 23, the yen sharply depreciated, approaching the 160 yen per dollar level. US Treasury Secretary Janet Yellen publicly stated that Japanese bond sell-offs had affected US Treasuries. When Japanese long-term bond prices plummeted and yields soared, Japanese bonds became more attractive, and funds originally allocated abroad tended to flow back into Japan, potentially triggering Japanese investors to sell US Treasuries. At the same time, the yen’s sharp depreciation also significantly increased the hedging costs for Japanese investors purchasing US Treasuries.

On January 23, in Tokyo and New York, the yen exchange rate experienced brief surges during the afternoon and morning sessions, respectively. Market speculation suggests that Japan and the US jointly conducted currency inquiry operations, i.e., financial authorities through central banks inquiring about current exchange rates and market conditions, seen as a preparatory step for foreign exchange intervention, a stronger signal than verbal intervention. As a result, the yen appreciated over consecutive days.

South Korea’s stock market has also experienced significant swings recently. According to Yonhap News Agency, since January, the Korea Composite Stock Price Index (KOSPI) has repeatedly hit record highs, with the closing price surpassing 5,000 points for the first time on January 27. However, after opening on February 2, KOSPI briefly fell to 4,933.58 points, a decline of over 5%. The Korea Exchange initiated its first “temporary suspension” of algorithmic trading this year. After opening on February 3, KOSPI rebounded sharply, rising 5.05% from the previous trading day’s close. The Korea Exchange again implemented a “temporary suspension,” and the index closed at 5,288.08 points, up 338.41 points or 6.84% from the previous day, marking the largest single-day gain in nearly six years.

Analysts believe that the sharp decline in the Korean stock market was due to decreased attractiveness of dollar-denominated emerging market assets, combined with several months of slowing export growth, which weakened market confidence and triggered panic selling. The subsequent strong rebound was mainly driven by improved global market sentiment and bargain hunting, with semiconductor stocks leading the rally.

Just over a month into 2026, multiple international financial markets—precious metals, forex, stocks—have experienced large-scale turbulence simultaneously. Experts say that the sharp sell-offs and rapid rebounds highlight the market’s extreme sensitivity to global economic and geopolitical events, indicating that such intense and unsettling volatility may become a norm in the near future.

As long as market judgments about the future path of Federal Reserve policies and dollar credit remain uncertain, global capital will continue to be reallocated, inevitably accompanied by significant market fluctuations.