Despite one of the sharpest pullbacks in years, ING analysts assess the movement in gold and silver as a position-driven ‘reset’. Following a rapid recovery, the US dollar, interest rates, and ETF flows are coming into focus as short-term factors.
The spectacular sell-off in gold and silver at the end of the week caught many market participants off guard. However, according to experts, it is more of a correction than a trend reversal. The bank refers to it as a ‘reset’ of positioning – not a fundamental turning point. Although volatility is likely to remain elevated in the short term, gold and silver have already recovered a significant portion of their losses, it was stated. This initial stabilization was accompanied by a weaker US dollar and a generally calmer market environment.
Manthey classifies the movement as historic – both in speed and magnitude. Gold recorded its sharpest daily decline since 2013 on Friday, and silver its largest daily loss ever. Further weakness initially followed on Monday as investors reduced overextended long positions. The subsequent strong counter-movement is interpreted by ING as an indication that the sell-off may have overshot its target – amplified by momentum-driven trading and leverage effects.
Three Months of Rally, Then the Break: What Triggered the Gold and Silver Sell-Off
ING places the sell-off in the context of an extraordinary preceding movement. In the three months prior, gold had risen from around $4,000 per ounce to over $5,500 per ounce. Silver climbed from approximately $50 per ounce to nearly $120 during the same period. A key driver of this phase was a wave of speculative buying from China – from private traders to larger equity funds rotating into commodities. Fresh capital inflows had thus driven prices into extreme ranges before an abrupt reversal occurred last week.
The analysts identify a political news item from the US as a short-term catalyst: President Donald Trump announced his intention to nominate Kevin Warsh as the next chairman of the US Federal Reserve. Warsh is perceived as comparatively ‘hawkish’, which abruptly boosted the US dollar and triggered profit-taking among investors who had bet on a weaker dollar. In a situation where positioning was already very one-sided, the shift in sentiment quickly triggered a chain reaction.
In addition, there was a technical amplifier: as volatility increased and positions became ‘overcrowded’, exchanges and brokers, according to experts, raised margin requirements. This is seen in the market as a warning signal that risks and leverage are increasing. Such adjustments can force deleveraging because investors must deposit additional collateral – or close positions. ING therefore emphasizes that the price slump was primarily driven by the reduction of speculative overhangs and forced liquidations, not by a sudden deterioration in macro or fundamental data.
Rapid Recovery and New Sensitivity: Dollar, Liquidity, and Risk Sentiment
With decreasing stress in the metal markets, a significant recovery occurred on Tuesday, according to ING. The spot price for gold reportedly rose by more than 6%, and silver by about 8%. This counter-movement fits the narrative of an ‘overshoot’: when momentum-driven selling and deleveraging push prices down too sharply in a short time, even a stabilization of the underlying conditions can trigger a rapid counter-reaction.
For the medium term, the analysts see a positive side effect: the correction has taken ‘foam’ out of the market and normalized positioning. At the same time, it indicates how sensitive gold and silver are to changes in liquidity, positioning, and general risk appetite. From ING’s perspective, the return of a familiar correlation is also striking: the inverse relationship between precious metals and the US dollar has reasserted itself. Thus, according to the bank, the dollar becomes a central driver of short-term price movements. Should currency impulses reverse, gold and silver are likely to react in the opposite direction – and be particularly sensitive in the short term.
For the coming weeks, ING derives a pragmatic expectation: without a material break in the macro environment, the recent sell-off should be understood as corrective rather than structural. However, according to Manthey, how quickly and sustainably a further recovery progresses strongly depends on dollar developments, interest rate expectations, and general risk sentiment.
Silver as ‘Gold on Steroids’: ETF Flows Become the Litmus Test
For silver, ING highlights a well-known characteristic: the metal is not called ‘gold on steroids’ without reason. Because the silver market is smaller and silver is both an investment and industrial metal, percentage movements are often significantly stronger than for gold. This exact pattern was evident in both the sell-off and the subsequent recovery.
For the medium term, the bank sees the fundamental situation for silver as essentially unchanged. Industrial demand in the wake of electrification and structurally tight physical balances continue to support the market. At the same time, due to its higher volatility, silver remains more dependent on sentiment and positioning than gold. ING explicitly states a key condition for a more stable recovery: ETF outflows must calm down. Holdings have fallen for eight consecutive days, and ETF demand is a significant price factor.
Gold Remains Structurally Supported: Central Banks as Stability Anchor
ING also considers the fundamental story for gold to be intact. Three pillars are named: safe-haven demand, ongoing central bank purchases, and the outlook for real interest rates. While short-term factors accelerated the recent rally, ING sees the basis of the multi-year uptrend in the so-called ‘official sector’ – the steady accumulation by central banks.
This phase began in 2022 when the war in Ukraine triggered a re-evaluation of reserve and diversification strategies. Since then, official demand has been a constant and stabilizing force in the gold market. Although central bank purchases have slowed after the record pace of 2025, institutions remain net buyers. Moreover, purchases could increase again if gold is no longer trading at its highs. ING emphasizes that this demand is usually strategic and reacts only marginally to short-term price fluctuations – a reason why the bank classifies structural support for gold as resilient over the medium term.
ING’s conclusion is thus clear: the bank believes it is more likely that gold and silver, after the correction, will work their way up in a less linear but more stable pattern, rather than the explosive rally of recent months continuing in the same form. Volatility is likely in the short term – but without a new fundamental break, ING speaks more of a correction with after-effects than a true trend reversal.
