A historic rally in the gold market came to a sudden and violent end on Friday, as prices collapsed from their recent peak. The precious metal, which had been celebrating a series of all-time highs, experienced a severe downturn, shedding significant value within hours. The catalyst for this sharp reversal was unexpected news from Washington, D.C., which bolstered the U.S. dollar and triggered a wave of profit-taking by investors.
A Sudden Shift in Sentiment
The week had opened on a note of euphoria but concluded with what analysts are describing as a flash crash. The announcement from President Donald Trump that he would nominate his candidate for Federal Reserve Chair earlier than anticipated acted as a powerful catalyst for the U.S. currency. Since gold is priced in dollars, the metal’s cost for international buyers surged instantly, dampening demand and exerting heavy downward pressure on its price.
Market observers also interpret the move as a long-overdue technical correction. Following a parabolic ascent to a record $5,450.00 per ounce on Wednesday, conditions were severely overbought. The decline gained momentum as automated trading systems amplified the selling pressure once key technical support levels were breached.
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Key Levels Shattered in the Decline
The sheer force of the sell-off is evident in the numbers. With a single-day drop of 9.13%, Friday’s trading dragged the price decisively back below the psychologically critical $5,000 threshold. The closing price settled at $4,907.50. Despite this sharp pullback, the metal maintains a year-to-date gain of approximately 13%, underscoring the extent of its preceding overheated rally.
- Closing Price: $4,907.50
- Daily Loss: -9.13%
- Distance from High: -9.95% (from all-time high of $5,450.00)
All Eyes Turn to Economic Data
While the shock of Friday’s plunge is significant, the fundamental drivers for gold—including geopolitical tensions and global debt dynamics—remain intact. The focus now shifts to the coming week for signs of a potential stabilization. The immediate spotlight is on the upcoming U.S. Non-Farm Payrolls report. Should this employment data come in weaker than forecasts, it could relieve some of the strength from the dollar and allow a foundation for gold prices to build upon.
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