Core Viewpoint - Precious metals, particularly gold and silver, experienced significant declines due to a combination of factors, marking the largest drop in over a decade for gold and the biggest fall for silver since February 2021 [1][2]. Group 1: Market Dynamics - Spot gold prices fell by as much as 6.3% to $4,082.03 per ounce, while spot silver dropped up to 8.7% to $47.89 per ounce [1]. - A stronger US dollar and positive trade talks between China and the US contributed to the decline in precious metals [2][3]. - The relative strength index for gold indicated that prices had entered overbought territory, suggesting a correction was due [3][4]. Group 2: Investor Behavior - Traders and dealers are taking profits following a robust rally, with technical indicators suggesting that recent gains were not sustainable [4]. - The ongoing US government shutdown has limited access to critical positioning data from the Commodity Futures Trading Commission, increasing uncertainty among commodity traders [5][6]. - The absence of this data may lead to speculative long positions in both gold and silver, making them more vulnerable to corrections [6]. Group 3: Volatility and Trading Activity - Volatility in precious metals has surged, with traders seeking to hedge against potential price drops or profit from the decline [7]. - A record of over 2 million options contracts linked to the largest gold-backed exchange-traded fund were traded recently, indicating heightened trading activity [7]. - Historical trends suggest that while current ETF gold holdings have not reached previous peaks, momentum typically fades, and buying often turns into selling [8].