Gold and silver plunge, JPMorgan analyst: Don't panic! The upward momentum will continue, still projecting 6300 by year-end.

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The global precious metals market experienced a historic plunge last Friday, with silver plummeting nearly 30% in a single day and gold also retreating sharply. Despite the astonishing declines, several Wall Street investment banks believe that this was a technical purge triggered by overcrowded positions and margin hikes, rather than a fundamental reversal of underlying logic.

Market data shows that the iShares Silver Trust fell 28.5% to $75.44 last Friday, marking its largest single-day decline ever; SPDR Gold Shares dropped 10.3% to $444.95. According to Goldman Sachs’ trading desk, silver’s volatility soared to extreme levels, only seen during the worst periods of the global financial crisis and COVID lockdowns, with the nominal ETF trading volume exceeding $32 billion.

The immediate trigger for the plunge was the Chicago Mercantile Exchange’s announcement to raise margin requirements before Friday’s close, forcing large amounts of leveraged capital to close out their positions before the weekend. At the same time, with U.S. President Trump nominating Walsh as the next Federal Reserve Chairman, the rebound of the dollar also exerted pressure on metal prices.

Despite the sharp price correction, institutional analysts were not panicked. Yardeni Research pointed out that trading volumes of major ETFs did not show signs of panic selling. JPMorgan reiterated its firm bullish stance on the medium-term outlook for gold, thinking that with physical assets outperforming paper assets, gold remains an effective portfolio hedge tool.

JPMorgan: Firmly bullish on gold, more cautious on silver

Led by Gregory C. Shearer, JPMorgan’s analysis team stated that they maintain a “firmly bullish outlook” on gold in the medium term.

In a research report released Sunday, the bank wrote that gold remains a dynamic, multi-faceted portfolio hedge, with central bank and investor demand still stronger than expected. JPMorgan forecasts that driven by central bank purchases and investor demand, gold prices will reach $6,300 per ounce by the end of 2026. Although the higher the price, the “thinner the air,” the structural rally does not face crash risk.

JPMorgan currently predicts that global central bank gold purchases will reach 800 tons in 2026, citing continued momentum for foreign reserve diversification.

By contrast, JPMorgan holds a “more cautious” attitude toward silver. Analysts noted that the drivers of silver’s recent rally are hard to quantify, and lack clear, structural bargain buyers like central banks. Therefore, silver may face a deeper washout than gold in the near term. Nevertheless, the bank believes that silver’s bottom has risen, with $75-$80 per ounce as the new support level, and silver is unlikely to fully retrace its recent gains.

Margin hikes trigger a long-position stampede

Friday’s selloff sped up sharply after CME Group announced higher margin requirements. CME raised gold’s maintenance margin from 6% to 8%, silver from 11% to 15%, and made corresponding increases for platinum and palladium, effective after Monday’s close.

Yardeni Research analysts noted that CME’s announcement right before Friday’s close was in effect a warning to traders: any positions held over the weekend would face significantly higher collateral requirements on Monday. This move forced many investors to liquidate positions en masse late Friday, accelerating the price decline.

Furthermore, the news of Walsh being nominated as Fed Chairman also triggered market reactions. JPMorgan analysts pointed out that Walsh's nomination led to a dollar rally, acting as a catalyst for the sharp correction in gold and silver prices after two weeks of “rapid acceleration and excessive extension.”

However, Yardeni Research believes that because Walsh tends to stimulate growth via low interest rates and is less concerned about inflation, this stance should theoretically remain favorable for precious metals, thus they question various “conspiracy theories” about the crash.

Goldman Sachs: Post-crowding technical cleanup

Goldman Sachs trading head Mark Wilson stressed in a report that investors should not “over-interpret” the past two days’ crash. He pointed out that the direct cause was overcrowded investor positions—the total exposure had reached the extreme 99th percentile, especially among systematic quantitative strategies.

Wilson believes that this was like a “position washout.” Although silver plunged 30% in a single day with huge ETF trading volumes, this was more of a technical adjustment. He emphasized that this adjustment should be evaluated in light of the rally since January. The core variables driving the market since the start of the year—continued dollar movement, AI investment enthusiasm, robust U.S. economic growth, and geopolitical restructuring—have not substantially changed.

While the market has been volatile, asset performance reflecting core trends remains strong, with rare earths up 35% this year, nuclear stocks up 21%, and European defense stocks up 20%. Wilson noted that even “meme stocks” have never seen such huge trading volumes; this extreme volatility reflects the collision of leverage, retail frenzy, and momentum chasing, rather than a shift in fundamentals.

Macro narrative and future outlook

Looking ahead, major institutions generally believe the macro environment still favors physical assets. Goldman Sachs maintains its annual core view, saying the appointment of the new Fed Chair is a key event, and investors should continue to hedge against currency depreciation and a weaker dollar outlook. Meanwhile, hard assets such as copper continue to hold an important place in portfolios.

Yardeni Research also pointed out that with Friday’s Producer Price Index (PPI) coming in above expectations and Walsh’s policy tendencies, the fundamental environment should continue to support precious metals.

Although the market needs to digest recent extreme volatility in the short-term, as Goldman Sachs said, no trade better captures currency depreciation, reflation, and geopolitical sentiment than silver and gold. JPMorgan concluded that until it is confirmed that the “bubble” has been fully squeezed out of prices, it remains cautious about re-entering silver in the near term, but remains firmly bullish on gold.

Risk Disclosure and DisclaimerThe market has risks, investment needs to be cautious. This article does not constitute personal investment advice, nor does it take into account individual users’ specific investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article suit their particular circumstances. Investment is at your own risk.

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