Gold and silver plummeted sharply on Thursday, shaking an already cautious market amid rising financial pressures in the US.
Spot gold fell more than 3% and silver plunged more than 10%, reversing some of their recent rally.
Bad News for Gold and Silver Amid the Highest US Debt and Rising Bankruptcies
At the time of publication, gold was trading at a price of US$4,956, down 3.97%, while silver was trading at US$76.74 after falling 10.65% in the last 24 hours.
This sudden sell-off has analysts and investors wondering whether a broader adjustment of real asset prices is taking place.
This decline in metals occurs amidst intensifying economic pressures. Over the past three weeks, 18 US companies with debts exceeding US$50 million have filed for bankruptcy.
It is worth noting that this is the fastest rate since the pandemic and nearly approaching the last level seen during the 2009 financial crisis.
Meanwhile, the New York Fed reported in a press release that household debt has now reached a record US$18.8 trillion. The total owed for mortgages, auto loans, credit card bills, and student loans is at an all-time high.
Serious credit card delinquencies rose to 12.7% in Q4 2025, the highest level since 2011, with young households feeling the pressure the most.
Such conditions typically emerge at the end of an economic cycle and often precede policy interventions such as interest rate cuts or liquidity injections.
Bitcoin is also under pressure, dropping to around US$65,000 as this pioneering crypto asset has lagged behind stocks and traditional safe haven assets in recent months.
Although digital assets typically act as a hedge amid macroeconomic uncertainty, recent trends show they have not effectively performed that function in this cycle.
Analysts are divided on large metal sales as Fed observers target interest rate cuts and asset price adjustments.
Analysts are divided in their views, offering different interpretations regarding the correction of precious metal prices. Some argue that this indicates short-term volatility within a larger trend of real asset price adjustments.
“Gold has been priced at US$5,000 by the US, and the market is starting to catch up,” wrote macroeconomic analyst Marty Party, suggesting that authorities may be positioning precious metals as collateral for government debt, alongside digital assets like Bitcoin.
However, other analysts warn that the still-tight liquidity conditions remain dominant, and further weakness may occur if financial pressures continue to increase.
Policy observers are now closely monitoring the Fed's response. Citi economists project that job growth will slow in the spring and summer after January's payroll data fell short of expectations, which could allow for three interest rate cuts in 2026.
Historically, spikes in corporate bankruptcies and consumer credit defaults typically precede monetary easing. This indicates that official support usually comes when economic pressures become more visible in the data.
The combination of record household debt, accelerated bankruptcies, and weakening real asset prices indicates the market is at a critical turning point.
“This economic disease, reflecting the indicators of 2008, is not an anomaly. It is a direct result of the current government policies driven by ideology, prioritizing budget maneuvers that fuel inflation and social engineering over basic economic stability and competitive market principles,” commented Jade Kotonono, a popular user on X.
Is the current drop in precious metal prices merely a temporary correction or the beginning of a multi-year price adjustment? Some optimistic analysts predict that after gold consolidates around US$5,000, the rotation back to digital assets could accelerate.
Nevertheless, the current situation presents both opportunities and risks, so investors should conduct their own research.
Amid a market facing unprecedented financial pressures, gold, silver, and Bitcoin may still drop further. Conversely, stabilizing policy responses could trigger the next asset repricing cycle.
