Recently, the international precious metal market has been volatile, with gold and silver rapidly rebounding after a sharp decline. London spot gold once returned to $5000 per ounce, but on February 5th, it sharply plummeted and briefly fell below the $4800 per ounce mark. London spot silver has experienced more intense fluctuations recently, with a single day intraday drop of over 30% and a surge of over 10%. On February 5th, London's silver platform plunged, with a intraday drop of over 17%, and then the decline narrowed slightly. Such a sharp rise and fall highlights the extreme uncertainty in the precious metals industry at present. Many market participants believe that the logic of the "Walsh trade" that triggered this round of trend has not been fully digested, gold and silver prices have not yet stabilized, downside risks still exist, and the market is in a fierce game state. At present, the strategic differences and investment stories between short-term and long-term investors further outline the structural characteristics of the current market. The news of Kevin Walsh's nomination as the next chairman of the Federal Reserve, who leans towards the hawkish side and is being blocked by leveraged retail investors, poured cold water on the market, but risk warnings had already been sounded before that. Looking back at the market, Liu Yu, Chief Economist of Huaxi Securities, stated in a research report that the decline in precious metals began before the announcement of the nomination (on the evening of January 29th), and was more of a correction due to overcrowding of bulls. Liu Yu believes that after experiencing an accelerated rise, the safe haven nature of precious metals has declined, and some have become "risk assets", causing a stampede due to the concentrated liquidation of long positions. The stampede of this commodity market occurs alternately during trading hours in Europe, North America, and East Asia. Silver follows the trend of gold, with the former having stronger volatility, and the recent "roller coaster" market trend of the two is still a continuation of technical trampling. Jia Hongkun, Chief Metal Analyst at Guotou Securities Research Institute, told Shanghai Securities News reporters that the phenomenon of leverage killing long positions in gold, silver and other commodities has triggered a "stampede" in trading, making it difficult for prices to return to their previous highs in the short term. The market needs to wait for the volatility to decrease. The huge market shock is essentially due to the fact that the current market has not fully understood the future monetary policy stance of the Federal Reserve. Deng Zhijian, Senior Investment Strategist at DBS Bank (China), told Shanghai Securities News reporters that it is still unclear whether Walsh's strategy will be dovish, hawkish, or pragmatic if he successfully takes office. This uncertainty has led to divergent opinions among investors on how future Federal Reserve policies will affect the US dollar, stock market, and whether to allocate to gold, resulting in a volatile market. If, like in the fourth quarter of last year, market expectations tend to be consistent and the direction is clear, investors will collectively choose to buy or sell. However, based on the current volatility, the market remains uncertain. ”Deng Zhijian stated. This volatile market environment provides excellent conditions for institutions to suppress highly leveraged retail investors. Deng Zhijian stated that a large number of leveraged futures long orders have emerged in the market, especially after the gold price rose to $4500 per ounce. Many of these traders have non professional backgrounds and use leverage more aggressively. In the futures market, individual investors who use high leverage to make multiple positions are susceptible to institutional resistance, and there is currently a possibility that institutions may take advantage of the situation to suppress individual investors' high position long positions. Once market volatility increases, these retail investors may be forced to close positions or trigger stop losses due to insufficient margin, exacerbating price corrections. Regarding the market situation on February 5th, Xu Ying, Chief Macro Strategy Analyst at Eastern Futures, told the Shanghai Stock Exchange reporter that there were no sudden negative news. The short-term geopolitical situation has eased, and coupled with the fact that silver itself has not yet fallen to its full potential, short-term funds have experienced a bearish trend. On the surface of the gold and silver market, there is a "hot and cold alternation", but behind it is the strategic differentiation between short-term traders and long-term allocators, forming a unique situation of "buying in line and selling in line". Dreaming of gold prices falling. ”Ms. Zhang, a "new player" in gold investment, told the Shanghai Stock Exchange reporter that after replenishing her gold holdings at a price of 1010 yuan/gram, she saw the gold price rise above 1100 yuan in the past two days and decisively took profits. Temporarily put it in the bag for safety, wait for a pullback before buying, it's like doing a T on gold. Ms. Xu, an investor who tasted the sweetness last year, has had a more dramatic experience recently. She told reporters that she chased high and bought funds related to accumulated gold and non-ferrous metals on January 28th, but suffered a sharp decline the next day. It's so crazy, losing thousands of yuan a day makes me a bit restless. "So she quickly adjusted, redeemed the fund, and turned to buying savings at low prices to make up for the loss by fast in and fast out. Unlike the mentality of short-term games, long-term allocators show greater determination. On February 5, at the head office of Jingrong Building in the Golden Yu Garden of Laomiao, Mr. Xu, who preferred gold investment in kind, came to withdraw 30 grams of gold bars for investment in the Year of Horse and Zodiac. He told reporters that he buys about 30 grams of gold bars before the Spring Festival every year, both as an investment and as a souvenir. I recently bought at a price of over 1200 yuan per gram, and short-term fluctuations will not affect my plans. ”Mr. Xu stated that he does not view gold as a short-term profit-making tool, but rather as a long-term reserve for family wealth. He has persisted in purchasing for more than a decade, and has almost collected two sets of the Chinese zodiac series. He has also witnessed the gold price rise from a few hundred yuan to over a thousand yuan along the way. A few years ago, when the price was low, I would also buy small gold bars of 5 grams or 10 grams in a scattered manner, which also achieved good investment returns, "said Fawad Razaqzada, a senior analyst at Jiasheng Group. It is expected that the volatility of gold prices will continue for some time, and the previous one-sided market has ended. Although the long-term structural support for gold still exists, the market appears relatively fragile after experiencing such an extreme and crowded uptrend. Jia Hongkun said that before the Federal Reserve's policies are fully clarified, short-term metal fluctuations may be high, and attention should be paid to controlling risks. Deng Zhijian believes that the market sentiment is not stable, and the gold price may once again drop to its previous low. However, in the long run, there is solid support from global central banks and institutional buying below it. Investors should avoid blindly adding leverage and focus on the logic of medium - to long-term allocation. (New Society)