Gold tumbles 5%, extends record-high selloff; China suspends silver, oil fund trading

Gold prices plunged nearly five per cent in early trading on Friday (Jan 30), after soaring to record highs this week. Gold is trading at $5,107.79 an ounce, having already shed gains on Thursday after reaching a record high of $5,595.47 on the same day. Mirroring the slide for gold, the silver prices fell under $100 on Friday on profit booking by investors and the announcement of Kevin Warsh as Fed chief. Silver slumped more than 15 per cent to $98.07 an ounce, having already slid Thursday following a record high the same day above $120.

Responding to extreme volatility in the commodity market, China suspended trading of five commodity funds to pause investment mania in gold, silver, and oil to provide cushioning against risks amid geopolitical tensions.

In a move to curb speculative excess, mainland China’s only public silver futures vehicle, the UBS SDIC Silver Futures Fund (LOF), was suspended from trading for the entire session on Friday. This marks the second full-day halt for the fund since January 22, as regulators struggle with unsustainable premiums that have recently exceeded 60% over the underlying assets.

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These developments came after gold recorded its largest ever single-day swing in market capitalisation as more than $3 trillion was wiped out from gold and silver in a single session. However, the selloff followed by a sharp rebound regaining around $2.3 trillion in market value, making it by far the most volatile and crazy day for the precious metal.

The global capital market commentary platform, The Kobeissi letter, described it as "Insane" noting that "Gold's volatility is above 2008 levels," when markets got hit by the financial crisis.

"Gold just posted its largest daily swing in market cap in history, at $5.5 TRILLION. Between 9:30 AM ET and 10:25 AM ET, gold lost -$3.2 trillion in market cap, or -$58 billion PER MINUTE. Then, between 10:25 AM ET and 4:00 PM ET, gold added back +$2.3 trillion.
That's over 3 TIMES the market cap of Bitcoin swung in 6.5 hours, or ~$850 billion per hour. We are witnessing one of the most historic trading opportunities of all time," The Kobeissi letter posted on X.