Precious Metals Retreat Sharply from Record Peaks: What's Next?

On December 29, during the U.S. afternoon session, gold and silver prices experienced a dramatic correction following their recent historic highs. This pullback—among the most severe witnessed in recent memory—reflected aggressive profit-taking behavior by momentum traders and liquidation of weakening long positions.

Record Highs Followed by Steep Decline

The rally leading into this sell-off had been spectacular. March silver futures on COMEX had surged to $82.67 per ounce, while February gold futures reached $4,584.00 per ounce, both representing milestone price levels. However, the enthusiasm proved short-lived. By day’s end, February gold futures had shed $203.4, settling at $4,349.3 per ounce, while March silver futures dropped $6.87 to close at $71.895 per ounce.

Technical Perspective: Correction or Reversal?

From a technical standpoint, today’s decline represents a corrective pullback within an otherwise resilient uptrend. While both precious metals sustained some short-term technical deterioration, the damage remains manageable at this stage. The critical question now hinges on the next 48 hours: if sustained selling pressure emerges Tuesday or Wednesday, it could inflict more meaningful technical harm and potentially signal a genuine shift in momentum. Conversely, should gold and silver prices stage a robust rebound in the coming days, Monday’s lows could mark the low point for this correction phase within the broader uptrend.

Market Context and Supporting Factors

The broader market environment showed mixed signals: the U.S. Dollar Index ticked marginally higher, crude oil advanced to approximately $59.25 per barrel, and the 10-year Treasury yield remained anchored around 4.118%. These cross-asset movements provide context for the precious metals’ performance but don’t fully explain today’s magnitude.

Technical Level Analysis

For February gold futures: Bulls are targeting a breach above the prior all-time high of $4,584.00 per ounce. Near-term resistance appears at $4,400.00 and $4,433.00 per ounce. On the downside, the immediate support zone sits at $4,316.00 (today’s low), with the critical floor at $4,300.00 per ounce. Should prices penetrate below $4,200.00, it would signal more serious technical damage.

For March silver futures: The candlestick pattern today—a pronounced bearish exhaustion tail—reveals that buyers exhausted their buying power at elevated levels before prices collapsed. This also formed a notable bearish key reversal pattern on the daily timeframe. Bulls need to recapture the all-time high of $82.67 per ounce to restore momentum. Bears have their sights set on breaking below $67.50 per ounce, the next key support level. In between, initial resistance materializes at $72.50 and $73.00 per ounce, with initial support at $70.00 and $69.00 per ounce.

The Immediate Outlook

The trajectory of gold and silver prices over the next two trading sessions will prove decisive in determining market direction for weeks ahead. Today’s sharp reversal has created a fork in the road: either these declines represent healthy profit-taking within a larger bull market, or they signal the start of a more meaningful correction. The burden now falls on the bears to confirm follow-through selling, or the bulls to demonstrate continued demand at lower levels. Market participants would be wise to monitor these price action developments closely.