Gold and silver show significant correction after the latest breakthrough of historical records

Massive Profit Fixation Cancels Previous Gains

The precious metals market took a heavy hit on December 29. During the US trading session, gold and silver prices dropped sharply, recording one of the largest single-day declines in their history. The trigger for this rebound was widespread profit-taking by short-term speculators on futures contracts, as well as the closing of lightly covered long positions accumulated during the previous rally.

Historical Peaks a Day Before the Drop

The situation developed as follows: during overnight trading, the March futures contract for silver on (New York Mercantile Exchange) rose to $82.67 per ounce — a level the metal had never reached before. Simultaneously, last Friday, the February futures contract for gold settled at $4,584.00 per ounce, setting a new historical high. However, this euphoria proved to be short-lived.

The Scale of the Correction Is Impressive

As a result of the trading session on December 29, the correction became significant. The February gold futures contract fell by $203.4 and closed the day at $4,349.3 per ounce. The March silver futures contract decreased by $6.87, ending at $71.895 per ounce. This dynamic indicates active revaluation of positions by market participants.

External Market Context

Against this backdrop, the US dollar index showed a slight increase. At the same time, oil prices moved upward, trading around $59.25 per barrel. The yield on 10-year US government bonds remained at 4.118%. These factors created a complex picture, with different assets signaling conflicting trends.

Technical Outlook: The Trend Remains Intact

From a technical analysis perspective, today’s decline should be viewed as a correction within the existing upward trend, not as its breakdown. Although gold and silver experienced some technical damage in the short term, these wounds are not deep. However, the development of events in the coming days will be critical: if trading on Tuesday or Wednesday results in strong selling pressure, the market could sustain more serious technical damage, more clearly signaling a local peak. Conversely, if gold and silver manage to make a strong rebound soon, today’s price lows could become a new support level for further growth.

Key Levels for Gold on February Contracts

For gold chart analysis, the following critical levels are distinguished:

Resistance levels:

• Main target for buyers — a breakout above $4584.00 per ounce (previous historical maximum)
• Current first resistance is at $4400.00 per ounce
• Second resistance layer is at $4433.00 per ounce

Support levels:

• The nearest support is today’s low at $4316.00 per ounce
• Below this, additional support is at $4300.00 per ounce

Silver on March Contracts: Bearish Geometry

The March silver chart has formed several concerning signals for buyers. First, a clear bearish exhaustion pattern (“reversal pattern”) has been identified, where the upward impulse was insufficient to sustain positions at higher price levels. Second, the daily chart line has outlined a noticeable bearish reversal pattern, worsening the prospects for short-term recovery.

Exit levels:

• Buyers are tempted to attempt to surpass the historical maximum of $82.67 per ounce
• Sellers are interested in pushing below the key support at $67.50

Operational levels:

• The nearest resistance is at $72.50 per ounce
• Elevated resistance is at $73.00 per ounce
• First support is at $70.00 per ounce
• Deeper support is at $69.00 per ounce

How Price Formation Works in the Metals Market

It is important to understand the mechanics of the gold market. It operates through two channels: the spot segment, where the materializes immediate delivery at the current price, and the futures segment, where deals are made for future delivery. Annual position adjustments and liquidity fluctuations influence which contracts remain the most active. On (CME), the Chicago Mercantile Exchange, the most liquid contract in recent days remains the December gold futures.

Conclusion: The Rest Depends on the Next Days

The current situation with gold and silver should be viewed as a temporary delay, not a fundamental market reorientation. The fact that metals reached new highs just before the decline indicates strong demand. However, whether today’s correction turns into a simple pause before further rallying or transforms into several weeks of decline will depend on how trading develops in the next one or two days. Gold and silver charts are at a crossroads, where each new session can confirm or refute the current buyer sentiment.