Gold, Silver Tumble 15-25% from January Highs as Fed Bets Unwind

Central bank buying continues to provide a floor. The People's Bank of China added gold to its reserves for a 16th consecutive month in February. The Reserve Bank of India bought 8 tonnes in January. Official sector purchases hit 1,037 tonnes in 2024, the second-highest on record.

Silver faces a different set of dynamics. Industrial demand, which accounts for roughly 60% of consumption, is softening as global manufacturing slows. The Silver Institute projects a 3% decline in industrial offtake this year. Solar panel manufacturing, a key demand driver, is seeing inventory builds in China. "Silver is caught between weak industrial demand and falling investment interest," a London-based analyst said. "It needs a catalyst to break out of this range."

Mining equities have been hit hardest. The NYSE Arca Gold Miners Index is down 18% from its January peak. Junior explorers with no production revenue have seen the steepest declines – some losing 40-50%.

The next catalyst is the March 20 Federal Reserve meeting. The dot plot and Chair Powell's press conference will set expectations for the rest of the year. A dovish tilt could spark a relief rally. A hawkish hold would likely extend the selloff.

The technical picture offers some guideposts. Gold has support at $2,300, the 200-day moving average. A close below that level opens a test of $2,200. Silver's support sits at $22.50, the August 2024 low. Resistance on any bounce is $2,450 for gold and $26 for silver.

"The correction is healthy after such a strong run," the Sydney trader said. "We need to see the macro turn before calling a bottom."