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”

2026 Marks a Deep Volatility Period in the International Financial Markets

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 experienced 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 weakening US dollar index, gold and silver prices continued to rebound on February 2, with gold hitting its largest single-day gain 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 across multiple countries is intensifying. The market is still reassessing risk appetite, and this wave of volatility may persist in the short term.

Severe Fluctuations and Adjustments in International Gold and Silver Prices

On January 29, early trading on the New York Mercantile Exchange saw April gold futures briefly reach $5,626.80 per ounce, and March silver futures briefly hit $121.785 per ounce. Shortly after, the market experienced a sharp sell-off, with gold prices plunging $380 in just 28 minutes, a nearly 7% drop, and silver prices falling 11% during the same period. On February 2, the April gold futures price on the NYMEX fell to $4,429.2 per ounce, and March silver futures briefly dropped to $72.35 per ounce. The global market capitalization of gold and silver shrank by over $3 trillion. However, in subsequent 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 are expected to suppress speculative participation and reduce liquidity, forcing traders to close positions. Previously, widespread bullish sentiment globally led to a backlog of profit-taking, and when prices broke key technical support levels, large-scale automatic stop-loss orders were triggered, amplifying market sell-offs and causing a cliff-like decline in gold and silver prices.

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’s, making it more 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 swings, 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 controls were forced to become liquidity providers.

Changes in market expectations for the US 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. If US interest rates remain high, it will put significant pressure on gold and silver prices, which do not generate interest income. Following the announcement, the dollar index rebounded briefly, the 10-year US Treasury yield rose, and funds flowed out of precious metals into US Treasuries.

Global 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 continued influence of geopolitical risks and other supporting factors, gold will continue to serve as a hedge against risk and market uncertainty. However, they caution against blindly chasing gains or panicking during declines.

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 ties with Trump, there are concerns about whether he can maintain the Fed’s independence.

Media reports indicate that Warsh’s billionaire father-in-law, Ronald Lauder, a classmate of Trump at the University of Pennsylvania’s Wharton School, 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 coordination 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 banking regulations, which differs from the typical “pause or expand” approach during rate-cutting cycles. Overall, market expectations of Warsh’s “hawkish” monetary policy stance 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 Labor Department announced on January 30 that the core Producer Price Index (PPI) for December 2025 and the full year 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 bearish for gold prices.

Philip Shaw, Chief Economist at UK-based 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 operations. Moreover, whether Warsh’s nomination will be approved by the 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 have stated they will oppose any Fed-related nominations until this issue is resolved.

Therefore, the upcoming monetary policy direction of the Fed remains uncertain and could influence international financial markets at any time.

Global Financial Market Turmoil and Capital Reallocation

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

Recently, the euro-dollar exchange rate broke through the 1.0 mark, reaching a four-year high, reflecting a “migration” of global capital seeking safe havens. In 2021, the implementation of European 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 natural response to improving economic fundamentals. However, by 2026, despite low growth expectations and ongoing inflation concerns in the eurozone, 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, US military actions against several countries, openly withdrawing from international organizations, imposing “reciprocal tariffs” on over a hundred countries and regions, and direct interference in Fed policies have subtly shifted global asset allocation. Investors now prioritize institutional stability and policy certainty. The dollar’s risk premium has surged, 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 international financial markets, affecting Asian markets as well.

In January, the Japanese yen experienced a sharp decline followed by a rapid rebound. On January 23, the yen depreciated sharply, approaching 160 yen per US dollar. US Treasury Secretary Janet Yellen publicly stated that Japanese bond sales had affected US Treasuries. When Japanese long-term bond prices fell sharply and yields soared, Japanese government bonds became more attractive, and funds originally allocated abroad tended to flow back into Japan, potentially triggering Japanese investors to sell US Treasuries. Additionally, the sharp yen depreciation increased the hedging costs for Japanese investors purchasing US debt.

On January 23, both Tokyo and New York forex markets saw brief surges in the yen exchange rate. Market speculation suggests that Japan and the US may have coordinated currency inquiries—where central banks ask banks about current exchange rates and market conditions—viewed as a prelude to foreign exchange intervention, a stronger signal than verbal intervention. As a result, the yen appreciated over consecutive days.

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

Analysts believe that the decline in the Korean stock market was due to diminished 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 significant turbulence. Experts suggest 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 US dollar credit remain uncertain, global capital will continue to be reallocated, inevitably accompanied by substantial market fluctuations.