The economist warned of a possible decline in gold to $3,500 by the end of the year

The state of the precious metals market at the beginning of February 2026 demonstrates a sharp correction in gold and silver prices. Gold, having reached a maximum of $5,523.03 per ounce, is now worth $4,884.23, which corresponds to a drop of 11.6%. Silver, which previously reached $118.05, is trading at $85.12, which means a decrease of 27.9%. These changes occur against the background of high volatility and sharp price fluctuations. This was announced to Izvestia on February 5 by Sergey Varfolomeev, an investment adviser in the register of the Bank of Russia, an expert in economics, and a partner at the Russian Export Center (REC).

"The price decline followed the 2025 rally, when gold rose by 56% and silver more than doubled, due to geopolitical tensions and expectations of lower key interest rates. However, by the end of 2025, the situation had changed, which led to a powerful correction. One of the main factors driving down prices was the strengthening of the US dollar and changes in the policy of the Federal Reserve System," he said.

Kevin Warsh's candidacy for the post of Fed chairman is perceived as a signal for a tougher monetary policy. This reduced the likelihood of a large-scale rate cut, strengthened the dollar and cooled inflation expectations. In response to these changes, silver fell by 30% and gold by 10%, the largest drop since 1983.

In addition, real interest rates have increased: the current yield on 10-year US government bonds is about 4.2% with an inflation rate of 2.4%, which increases the cost of alternative assets. Every percentage point of real interest rate growth is usually associated with an 8-10% drop in gold.

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The 2025 rally also caused the market to overheat. The relative strength index (RSI) for gold has reached 90, indicating extreme overbought conditions. Investors started taking profits after reaching historical highs. The situation was particularly acute during the winter holidays, when liquidity decreased and margin requirements for silver futures were raised to $25,000 per contract, which triggered a chain reaction of liquidations, Varfolomeev explained.

According to him, the markets began to expect more moderate economic growth in 2026, which reduced the role of precious metals as protection against inflation. The stability of the domestic political situation in the United States after the appointment of Warsh weakened the geopolitical premium, which was previously supported by the actions of US President Donald Trump.

Forecasts for 2026 show that gold could fall to $3,500 by the end of the year, indicating a 21% decline due to weakening demand. Silver, in turn, is more sensitive to fluctuations due to its dependence on industrial demand, which is expected to reach 1% in China in 2026.

"The cumulative shortage of silver has reached 700 million ounces in recent years, but it is projected that more than 212 million ounces will enter the London market in 2026, which may put pressure on prices. A 20-30% decrease in prices is a consequence of macroeconomic changes, technical factors, and psychological moods. Although metals remain above the levels of early 2025, new corrections are possible in 2026," the expert said.

It is also important to take into account historical analogies, for example, the events of 1980, when silver suffered a sharp drop of 30% after rising due to speculation, and 2011, when gold fell by 30% after peaking amid the crisis. These examples illustrate how volatility and high liquidity can affect the market.

According to Binance on January 31, the cost of bitcoin dropped below the $80 thousand mark. This became a level that the exchange rate of the first cryptocurrency has not touched since the second half of April 2025, according to trading data. This dynamic reflects the continued pressure on the crypto market amid general market uncertainty and a decrease in investor appetite for risky assets.

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