From Record to Correction: Gold Hits Emergency Brake
Gold prices finally hit the emergency brake after a frenzied rally that nearly broke $5,600/ounce. On Thursday (January 29th), gold plummeted by -5.7% (intraday)—its deepest percentage drop since October—as investors rushed to take profits and sought liquidity to cover losses in other assets, particularly stocks.
Interestingly, this wasn't a classic "risk-off" pattern. Normally, when the market is afraid, gold is sought after. But this time, gold was sold off because it became a "liquidity ATM"—the asset that can be liquidated most quickly when volatility suddenly increases. Silver also followed suit, dropping sharply (by around -8% intraday).
Technically, conditions were already vulnerable to a correction. Gold had already risen more than 20% this month and had advanced for eight consecutive days. Gold's RSI even briefly broke above 90 (super-overbought territory), while silver's RSI hovered around 84—a level often signaling the market needs a breather.
Another contributing factor: the US dollar's slight rebound, putting additional pressure on precious metals. The DXY/dollar index hovered around 96.215.
Gold prices hovered around $5,368/ounce, trimming their decline to less than 1%, while silver was around $116.69/ounce in the latest US trading update.
Source: Newsmaker.id
