Gold and silver staged a notable rebound on Tuesday after suffering a historic wipeout that rattled even seasoned commodity investors. The recovery comes as market participants reassess whether last week’s collapse marked a lasting turning point or an exaggerated reaction to short-term catalysts layered on top of an overcrowded trade.

Spot gold climbed more than 2% to around $4,770 per ounce after plunging nearly 10% in a single session last Friday, its steepest one-day drop in decades. Silver, which endured an extraordinary one-day collapse of roughly 30% — the worst since 1980 — also recovered modestly, trading back above $81 per ounce. While prices remain well below recent peaks, the rebound has shifted the conversation from panic to positioning.

A Violent Reset, Not a Broken Narrative

Strategists at Deutsche Bank described the sell-off as an overshoot relative to its triggers. In their view, the scale of the move cannot be explained solely by speculative excess, even though positioning had clearly become stretched after months of relentless gains. More importantly, they argue that the underlying motivations for holding precious metals — across official institutions, asset managers, and individual investors — have not fundamentally deteriorated.

Gold and silver had surged earlier this year as investors sought protection from geopolitical risk, currency debasement fears, and growing unease around central bank independence. That broader backdrop has not disappeared. Instead, the recent rout appears to reflect forced deleveraging, profit-taking, and risk reduction following an abrupt shift in macro expectations.

Dollar Strength and Fed Politics in Focus

A key catalyst for the sell-off was a sharp rebound in the U.S. dollar, which followed President Donald Trump’s nomination of Kevin Warsh as the next chair of the Federal Reserve. The move forced a rapid repricing of interest-rate expectations, undermining gold and silver, which are highly sensitive to real yields and currency strength.

Historically, such macro pivots can trigger violent adjustments when markets are heavily one-sided. According to Barclays, technical indicators and positioning had become overheated, leaving prices vulnerable to exactly this kind of air pocket. Still, the bank noted that the strategic “bid” for gold remains intact, particularly in a world marked by policy uncertainty, fiscal strain, and central bank reserve diversification.

Silver’s Industrial Backbone

Silver’s swings have been far more extreme than gold’s, reflecting its smaller market size, higher volatility, and heavier retail participation. Yet analysts caution against dismissing the metal’s long-term fundamentals. Beyond its monetary role, silver is a critical industrial input, with demand increasingly tied to data centers, electrification, and solar energy.

Forecasts suggest global silver demand could rise to as much as 54,000 tonnes annually by the end of the decade, while supply growth lags far behind. That structural imbalance has not changed in the space of a few trading sessions, even if speculative flows temporarily overwhelmed the market.

What to Watch Next

In the near term, volatility is likely to remain elevated as traders rebuild positions cautiously and reassess risk. Much will hinge on the trajectory of the dollar, U.S. real yields, and signals from global central banks. For now, analysts see the rebound less as a new bull leg and more as stabilization after an overheated run — but one that leaves the longer-term case largely intact.