Risk sentiment suddenly rises, causing precious metals to be sold off in a "stampede" under liquidity squeeze.

Global financial markets experienced a sudden "risk-off" sentiment, with precious metals facing selling pressure. Due to the sharp drop in US technology stocks and increasing liquidity demand, the price of gold plummeted, while silver and copper also saw steep declines. Some traders sold metal assets to offset losses in their stock positions, while others shifted funds towards US Treasury bonds for safety. Data shows that gold prices saw a maximum intraday decline of 4.1%, silver plummeted 11%, and copper prices on the London Metal Exchange dropped 2.9%, before rebounding slightly from their lows. Nicky Shiels of MKS PAMP SA noted that market volatility came "fast and fierce," showing clear signs of a sell-off in risky assets. Even safe-haven assets like gold could be sold off due to investors' urgent need for liquidity in extreme market pressures. Market participants pointed out that some of the declines in gold and silver on Thursday were related to profit-taking. The previous rally was driven to a certain extent by speculative buying, with short-term funds exiting when risk sentiment reversed. Ole Hansen, a commodity strategist at Saxo Bank, stated that trading in gold and silver still heavily relied on sentiment and momentum, often showing pressure on days of intense volatility. Looking back, the strong uptrend in precious metals since 2024 accelerated significantly last month, with momentum funds driving gold and silver prices to consecutive highs. However, this momentum came to a halt on January 29th, when gold recorded its largest daily decline in over ten years, and silver saw its largest decline in history. Since then, both metals have been trading in a range-bound manner in the absence of new catalysts, with significantly increased volatility. Fawad Razaqzada, a market analyst at Forex.com, believes that Thursday's sharp drop does not necessarily mean that gold will enter a sustained downtrend, but it does increase the likelihood of maintaining high volatility in the short term. "The market has cleared a substantial downside liquidity, and the next trend will depend on the price action near key technical levels." From an institutional perspective, the risk aversion in the stock market triggered by uncertainty in AI is spilling over to the metal markets. Michael Ball, a macro strategist, pointed out that this decline seems more like a "momentum deleveraging" triggered by algorithmic trading and systematic strategies, especially the concentrated liquidation of programmatic trend funds after breaking key price levels. Despite the recent sharp declines, several banks maintain a bullish long-term outlook on gold, believing that the logic supporting gold prices has not changed, including political tensions, concerns about the independence of the Federal Reserve, and the shift of funds from traditional assets (such as currency and sovereign debt) to physical assets. JPMorgan Chase forecasts that gold prices could rise to the range of $6,000 to $6,300 per ounce this year, Deutsche Bank Aktiengesellschaft and Goldman Sachs Group, Inc. also maintain a bullish view. In terms of silver, the dynamics in the options market have magnified volatility. Trading activities in bullish options contracts for May to June at $125 for the world's largest silver ETF, iShares Silver Trust (SLV.US), were active, with some investors selling contracts after buying at the high levels, potentially exacerbating selling pressure. Looking ahead, traders are closely monitoring upcoming US economic data, especially core inflation indicators, to assess the Federal Reserve's interest rate path. Generally, a decrease in borrowing costs is favorable for non-interest-bearing precious metal assets. As of the close of the US stock market, spot gold fell 3.15% to $1,922.3 per ounce, silver dropped over 10% to $75.31, platinum and palladium also declined, while the US dollar index rose slightly.