[Teheran-ro] Warning Lights Flashing in the Gold and Silver Rally

One of the most striking recent developments in global financial markets has been the sharp increase in volatility in gold and silver prices. After repeatedly hitting all-time highs, gold and silver have plunged in a short span of time only to rebound again, creating a roller-coaster pattern. On the surface, the phrase "super rally in precious metals" still seems to apply, but the price action alone shows that market anxiety is surfacing far more openly than before.
More important than the direction of gold and silver prices is how they are moving. A phase marked not by gradual gains but by repeated spikes and drops suggests that investor conviction has weakened. This goes beyond simple profit-taking and signals that gold and silver are no longer viewed solely as one-way safe-haven assets.
Historically, long upcycles in gold prices have often coincided with periods of economic expansion. During the gold super rallies of the 1970s and 2000s, the United States economy maintained broadly solid growth. There is, however, a common thread. When gold prices passed their peak and entered a correction phase, the economy without exception shifted into a slowdown or recession. Sharp corrections in gold prices have frequently appeared at turning points in the economic cycle.
The current gold and silver rally has another distinctive feature compared with the past. In the 1970s, rising gold prices unfolded alongside an interest rate hiking cycle, while in the 2000s gold strengthened during a rate-cutting phase. Today’s environment clearly resembles the latter. The Federal Reserve System (Fed) has adopted an easing stance with rate cuts and de facto quantitative easing, creating extremely loose liquidity conditions. This liquidity has lifted not only stocks and bonds but gold and silver prices at the same time.
However, the recent sharp drops and rebounds show that this rally cannot be explained by liquidity effects alone. Demand for gold is being driven by both risk-on behavior and traditional safe-haven motives.
What deserves particular attention is the behavior of other assets that have been grouped with gold as safe havens. While gold prices have been swinging wildly, Bitcoin (BTC) has entered a correction phase, and demand for U.S. Treasury securities has weakened, leaving long-term yields at elevated levels. Even among traditional safe assets, cracks are appearing. This suggests that the market is no longer sure where true "safety" can be found.
In the end, the recent plunge and rebound in gold and silver prices is not just market noise. It is a clear message from the precious metals market. The current rally may well continue, but the path is unlikely to be smooth. The warning lights around gold and silver are becoming more visible not in their price levels, but in the form of mounting volatility.
dschoi@fnnews.com Choi Doo-seon, Deputy Editor, Markets Desk Reporter