Precious Metals Rebound Amid Elevated Volatility

Volatility has remained elevated within precious metals markets this week, following golds greatest daily decline (-12%) since the early 1980s and silvers largest intraday decline (-36%) on record on the 30^th of January, an event which erased approximately USD $7 trillion from global commodity markets.

At the time of writing, gold has staged a meaningful recovery, rebounding 8% following its long overdue, and arguably, inevitable correction. The metal has since entered a period of consolidation, though prices continue to trade in a wide range, with daily swings of several hundred US dollars not uncommon.

Silver has experienced an even greater rebound, recovering 16% from recent lows.

Taking a broader perspective, precious metals year-to-date performance remains robust with gold, silver and platinum returning 17%, 16% and 3% respectively.

Those figures underscore the scale and strength of the rally that preceded the late January selloff, with precious metals continuing to build on their market leading returns from 2025.

What is driving the current volatility?

The primary catalyst behind the volatility was the late-January nomination of Kevin Warsh as Chair of the Federal Reserve, which “eased fears that the appointment of a more dovish candidate could accelerate the recent weakening of the US dollar” (UBS). Historically speaking, gold has significantly benefitted from a decline in the dollar given their inverse relationship, with a noticeable fall since President Trumps inauguration in 2025, as illustrated in Figure 1.

Figure 1

While Kevin Warsh has historically held a hawkish policy stance, many believe he will bow to President Donald Trump’s demand for lower interest rates. This should continue to support gold, with the CME’s FedWatch tool implying a 57% probability of a rate cut during the Federal Reserve’s June meeting. The prospect of falling rates in the US provides a highly supportive environment for precious metals, as investors shift away from lower yielding assets like cash and bonds toward assets with higher capital growth potential.

The data supports this view, with gold rallying substantially during rate cutting cycles this century.

Continued geopolitical uncertainty is also expected to remain a core driver for precious metals. Recent developments involving Venezuela, Iran and Greenland, alongside persistent U.S. tariff and sanctions threats, have reinforced safe-haven appeal, initially helping propel gold prices decisively above the USD $5,000oz psychological price level. This heightened risk environment is reflected in the Geopolitical Risk Index (GRI), which began January at 163.74, 59% above its long-term average of 103 dating back to 1985.

Central bank demand continues to remain robust, with yearly purchases across 2025 totalling 863 tonnes, well above the average pre-2022 (473 tonnes). ETF flows also continue to climb to record levels, with the World Gold Council reporting a monthly holdings increase of 120.1 tonnes throughout January.

These two fundamental drivers remain key pillars underpinning the ongoing precious metals bull market.

What can we expect next?

At ABC Bullion, we are of the view that neither the recent volatility, nor the potential for another short-term pullback in prices should distract or discourage precious metal investors.

The long-term bullish thesis for precious metals is firmly intact, underpinned by the same fundamental drivers that propelled prices to record levels throughout 2025. These include robust central bank demand and sustained retail investor demand via ETF flows as mentioned above, as well as sticky inflationary pressures, and the potential for a significant correction in stretched equity markets.

Given this backdrop, the broader outlook remains constructive and should continue to see the precious metals sector attract further investment across 2026 and beyond.

 Thank you for choosing ABC Bullion.

Jordan Eliseo
General Manager, ABC Bullion

Luke Tyler
Market and Business Analyst, ABC Bullion

^{Disclaimer: This document has been prepared by Australian Bullion Company (NSW) Pty Limited (ABN 82 002 858 602) (ABC). The information contained in this document or internet related link (collectively, Document) is of a general nature and is provided for information purposes only. It is not intended to constitute advice, nor to influence any person in making a decision in relation to any precious metal or related product. To the extent that any advice is provided in this Document, it is general advice only and has been prepared without taking into account your objectives, financial situation or needs (your Personal Circumstances). Before acting on any such general advice, we recommend that you obtain professional advice and consider the appropriateness of the advice having regard to your Personal Circumstances. If the advice relates to the acquisition, or possible acquisition of any precious metal or related product, you should obtain independent professional advice before making any decision about whether to acquire it. Although the information and opinions contained in this document are based on sources, we believe to be reliable, to the extent permitted by law, ABC and its associated entities do not warrant, represent or guarantee, expressly or impliedly, that the information contained in this document is accurate, complete, reliable or current. The information is subject to change without notice, and we are under no obligation to update it. Past performance is not a reliable indicator of future performance. If you intend to rely on the information, you should independently verify and assess the accuracy and completeness and obtain professional advice regarding its suitability for your Personal Circumstances. To the extent possible, ABC, its associated entities, and any of its or their officers, employees and agents accepts no liability for any loss or damage relating to any use or reliance on the information in this document. It is intended for the use of ABC clients and may not be distributed or reproduced without consent. © Australian Bullion Company (NSW) Pty Limited 2020.}