A wave of selling sparked by concerns over artificial intelligence swept through precious metals markets on Thursday, sending gold into its steepest one-day drop in more than a decade and silver into a record-breaking slide.
Gold tumbled as much as 4.1%, while silver cratered 11%. Copper on the London Metal Exchange fell 2.9%. Prices have since pared some losses, but the shock lingers.
The puzzling part? There was no clear fundamental catalyst. Instead, traders quickly pointed to algorithms.
Michael Ball, a macro strategist at Bloomberg, said commodity trading advisers (CTAs)—quantitative funds that use computer models to bet on price trends—likely amplified the selloff. “The risk-off tone in equities driven by AI disruption concerns is starting to broaden out,” Ball said. “Metals dropped suddenly in what looks like systematic strategy selling—the kind of momentum-driven de-risking you often see from the CTA community when key levels give way.”
“We are all clueless,” said Nicky Shiels, head of metals strategy at MKS PAMP SA. “It all happened so quickly and feels like a ‘risk-out’ move.” She explained that in times of extreme market stress, even haven assets like gold can be sold by investors desperate for liquidity. Margin calls forced some to unwind commodity positions, while profit-taking added fuel—after all, the blistering rally in gold and silver had been driven partly by speculative buying.
Ole Hansen, commodity strategist at Saxo Bank, summed it up: “A great deal of trading in gold and silver remains sentiment and momentum driven. On days like these, they will struggle.”
So, is the gold bull market over? Wall Street’s answer, by and large, is no.
Fawad Razaqzada, market analyst at Forex.com, said the sudden drop “doesn’t signal that it’s about to enter a sustained downtrend,” though it does raise the likelihood of continued near-term volatility. “The market has now cleared out a large pocket of downside liquidity, and the next move will depend on how price behaves around key technical levels.”
JPMorgan Private Bank still sees bullion at $6,000–$6,300 an ounce by year-end. Deutsche Bank and Goldman Sachs also maintain bullish outlooks. Their core thesis: the drivers behind the rally remain intact—geopolitical tensions, questions over Federal Reserve independence, and a broader shift away from traditional assets like currencies and sovereign bonds.
Amid the turmoil, Greenlight Capital founder David Einhorn made a bolder call: gold is displacing U.S. Treasuries.
He argued that global central banks are steadily rotating into gold as confidence in U.S. debt erodes. Citing reports that China has encouraged its banks to scale back Treasury holdings, Einhorn noted that central bank gold purchases remain elevated. The World Gold Council estimates that central banks bought roughly 863 metric tons of gold in 2025.
“Central banks around the world are buying gold,” Einhorn said, asserting that the metal is now rivaling—or even replacing—Treasuries as the preferred reserve asset. He cited two main drivers: unstable U.S. trade policy, which is prompting some nations to settle transactions in dollar alternatives, and America’s swelling debt and persistent deficits, which are undermining long-term confidence in dollar-denominated assets. “Our fiscal policies and our monetary policies don’t make any sense,” he said, calling the U.S. deficit trajectory unsustainable.
But near-term risks are real—and BCA Research warns that a retreat of Asia-driven momentum buying could trigger a meaningful pullback.
Roukaya Ibrahim, the firm’s chief commodity strategist, said investment demand for gold ETFs from China and Asia has emerged as a critical driver of gold prices in recent months. The problem: these investors are “very momentum-driven and price sensitive.” Even a modest correction could prompt selling and accelerate declines.
“A reversal of those inflows could trigger an unwinding of their positions and produce a meaningful price drawdown in the near term,” BCA said.
Still, the firm emphasized that structural supports remain solid. Global investment demand is likely to underpin higher prices over a cyclical horizon, and central bank buying “will be accumulating the yellow metal on corrections,” providing a floor beneath gold prices and preventing any correction from morphing into an extended bear market.
Correction, or end of the line?
Traders are now eyeing Friday’s U.S. core CPI print for clues on the Fed’s rate path. Hedge fund billionaires are calling gold the new Treasuries. And strategists are warning of momentum reversals from Asia.
The one point of consensus? Near-term volatility is far from over.
But a deeper question lingers: When algorithmic trading can puncture a haven asset in minutes, and when AI fears can intertwine with geopolitics and debt concerns to trigger a cascade, how much of gold’s “safe haven” luster remains?
Perhaps the answer lies in those 863 tons of gold that central banks quietly added last year.
