Gold Steadies After Two-Day Drop in Thin Lunar New Year Trading

Gold prices steadied on February 17, 2026, after a two-day decline amid thin trading conditions linked to the Lunar New Year holiday. The market had seen a sharp correction in the previous session, with both gold and silver experiencing significant losses according to market data. The reduced liquidity in Asian markets, particularly in China, amplified price swings and highlighted the metals' dependence on regional demand as reported.

The broader gold ore market, however, remains on a strong growth trajectory. It expanded from USD 19.54 billion in 2025 to USD 21.18 billion in 2026 and is expected to grow at a compound annual rate of 9.00%, reaching USD 35.72 billion by 2032 according to a global forecast. This growth is being driven by geological complexity, processing innovations, and regulatory changes affecting supply chains. The sector is also seeing increased demand from industrial end-users and investors seeking resilient assets.

Despite recent volatility, long-term support for gold remains intact. Central bank purchases, continued diversification away from dollar-centric assets, and geopolitical tensions reinforce gold's role as a store of value according to market analysis. At the same time, elevated fiscal deficits and global geopolitical fragmentation are reinforcing demand for physical bullion. Technical indicators show gold finding support near USD 4,860, with further downward pressure unlikely without a shift in these fundamentals.

Why Did This Happen?

The recent price correction was partly a function of timing and liquidity. The Lunar New Year period traditionally sees reduced activity in Asian markets, which are major buyers of precious metals as market data shows. With trading volumes thin, even modest selling pressure can create sharp price movements. This effect was amplified by a broader unwind of long positions in gold and silver, which had surged in early 2026 according to financial reports.

In silver, the correction has been more pronounced. Prices have fallen nearly 40% from their January high of $121.646 per ounce according to market data. This volatility reflects the metal's smaller market size and strong industrial demand. Silver's fundamentals, including a structural deficit forecast for 2026, remain intact, but near-term price action suggests investors are reevaluating risk as analysis indicates.

How Did Markets React?

Gold and silver-related exchange-traded funds (ETFs) have also experienced sharp declines, with some funds falling by as much as 4% according to trading data. This suggests that institutional and retail investors are actively reassessing their exposure to the sector amid a shifting macroeconomic backdrop. The U.S. dollar, which has seen bearish positioning among fund managers, could also play a role in future price direction according to market reports.

Copper has followed a similar pattern, with prices dropping below USD 6.00 per pound after reaching a record high earlier in February according to market analysis. Unlike gold and silver, copper's correction is also being driven by rising inventories and a lack of visible demand from China, which is expected to resume activity in early March. This underscores the broader theme of short-term liquidity challenges overshadowing long-term bullish narratives.

What Are Analysts Watching Next?

Analysts are closely monitoring the return of Asian demand and the performance of the U.S. dollar. A reversal in the dollar's bearish positioning could weigh on gold and silver, especially in a thin trading environment. At the same time, the Fed's evolving stance on interest rates and the potential for changes in regulatory oversight of the central bank's balance sheet may influence investor flows according to Bloomberg analysis.

For gold, the next key level of support is near USD 4,670, according to technical analysis. A break below this level could trigger further selling, particularly if macroeconomic conditions shift or if the U.S. dollar experiences a rebound. However, structural demand factors—including central bank purchases and geopolitical fragmentation—remain strong enough to support a broader bull trend.

Silver faces similar challenges, with the recent formation of two lower highs signaling weakening conviction among buyers as market data shows. The metal's dual role in industrial and monetary demand ensures continued interest, but near-term consolidation is expected until liquidity conditions normalize and industrial demand improves.

In copper, the focus is shifting toward inventory levels and post-Lunar New Year activity in China. Analysts suggest that prices may remain under pressure until demand visibly improves and inventories begin to decline. This dynamic highlights the importance of physical market conditions in commodity markets, where fundamentals often lag price action according to market analysis.