Gold Records Sharpest Single-Day Drop in Over 2 Months: Is The “Metal Season” Ending?

Gold plunged over 5% in its steepest one-day drop in more than two months. Furthermore, silver, platinum, and palladium also slumped in a broad selloff of precious metals on December 29.

As prices rebound today, analysts are split. Some expect the momentum to continue, while others warn of a shift that could benefit crypto assets.

Precious Metals and Crypto Move in Opposite Directions as Volatility Spikes

On December 29, the precious metals market experienced a significant downturn. Gold dropped more than 5%, marking its largest single-day loss since late October 2025.

Silver briefly surged to record highs near $84 before reversing sharply and closing around $70.5. This represented a 16% dip. Palladium suffered comparable declines.

Lastly, Platinum also depreciated by over 15%. These drawdowns came amid an explosive rally that saw precious metals reach new highs this month.

“As we said last night, the rally was getting out of hand. Expect much more volatility,” The Kobeissi Letter posted.

While precious metals declined, the crypto market staged a recovery, with Bitcoin briefly reaching the $90,000 mark and Ethereum climbing to $3,000. The move led some analysts to speculate that capital rotation had begun.

“Silver dropped 11% in the last few hours as crypto started to pump. Money is rotating from silver & gold into Bitcoin and the broader crypto market,” Crypto Rover commented.

However, the pullback in metals proved short-lived. Precious metals are once again trading in the green today, with gold up nearly 1% over the past 24 hours. Silver has jumped 3%, platinum has gained 2.6%, while palladium continues to post modest losses.

As metals rebounded, the crypto market moved in the opposite direction. The total market cap slipped 0.13% over the past 24 hours, reinforcing mixed signals and leaving analysts divided on the market’s next move.

Gold’s Streak Supports Bullish Case

Many analysts argue that the recent pullback in precious metals does not signal a shift in underlying demand. Expectations remain that the rally could extend into next year.

“That kind of synchronized drop usually points to a crowded trade unwinding, not a sudden shift in underlying metal demand,” a professional investor stated.

Furthermore, the Kobeissi Letter highlighted that gold has now traded above its 200-day moving average for approximately 550 trading days. This marked the second-longest streak on record.

The only longer period followed the 2008 financial crisis, when gold held above the level for roughly 750 trading days. During the current streak, gold prices have surged 135%, exceeding the 91% gain recorded between 2009 and 2011.

In comparison, the 1986-1988 cycle lasted around 510 sessions, with a 38% rise, while the 1978-1980 period saw gold climb 209% over approximately 495 sessions.

“Gold’s momentum remains historically strong.” the post added.

The Case for Capital Rotation

On the other hand, one market watcher noted that sharp corrections in gold often weigh on sentiment and can trigger capital rotation.

“While some expect a rebound, these divergences hint at a deeper shift in market focus, which could benefit other assets like BTC,” Professor Crypto remarked.

From a technical standpoint, analyst Michaël van de Poppe pointed out that multiple bearish divergences have surfaced on various timeframes, highlighting waning momentum despite recent new highs. He explained that,

“Gold has corrected substantially…Although the talk of the room won’t be about an extended correction, the fact that it dropped beneath the previous ATH isn’t great. This is probably the stage where a lot of people will believe that there’s another leg up on the horizon, while the same group will blame Bitcoin for not going up. That’s the stage where it rotates.”

In a separate post, Van de Poppe observed a bullish divergence on the daily BTC/gold chart, suggesting that Bitcoin is likely to outperform gold in the period ahead.

“Similar periods of such a bullish divergence: Q3 2024 (just before Bitcoin broke out towards the $100K barrier), Q4 2022 (the end of the bear market for Bitcoin). The big rotation is on the horizon,” he added.

Thus, the swings across precious metals and crypto underscore rising market volatility and growing uncertainty around capital flows. While gold’s long-term trend remains historically strong, technical signals and relative performance suggest investors are increasingly weighing alternative assets.

Whether the recent moves mark a temporary divergence or the early stages of a broader rotation remains an open question.

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