Gold has suffered a drop of over 5% on its worst day in the last two months. Moreover, silver, platinum, and palladium have also lost ground in a broad sell-off of precious metals on December 29.
With prices bouncing back today, analysts appear divided. Some expect the momentum to continue, while others warn of a potential shift that could potentially benefit cryptocurrencies.
Precious metals and cryptocurrencies are moving in opposite directions as volatility increases
On December 29, the precious metals market experienced a sharp decline. Gold lost over 5%, marking the largest daily loss since the end of October 2025.
Silver recorded a slight bounce to historical highs near $84 before sharply reversing and closing around $70.5. This represented a decline of 16%. Palladium suffered comparable losses.
Finally, platinum also experienced a depreciation of over 15%. These pullbacks came after an explosive rally that had pushed precious metals to new highs just this month.
“As we said last night, the rally was getting out of hand. Expect much more volatility,” published The Kobeissi Letter.
At the moment when precious metals lost value, the crypto market made a recovery, with Bitcoin briefly reaching $90,000 and Ethereum rising up to $3,000. This movement led some analysts to speculate that a capital rotation had begun.
“Silver has fallen 11% in recent hours as crypto has started to rise. Money is rotating from silver and gold towards Bitcoin and the broader crypto market,” commented Crypto Rover.
However, the retracement of metals was short-lived. Precious metals are back in the green today, with gold up nearly 1% in the last 24 hours. Silver jumped 3%, platinum rose by 2.6%, while palladium continues to show slight losses.
With the return of metals to positive levels, the crypto market moved in the opposite direction. The total market capitalization has fallen by 0.13% in the last 24 hours, reinforcing conflicting signals and leaving analysts divided on the next move of the market.
The positive series of gold supports the bullish outlook
Many analysts argue that the recent retracement of precious metals does not indicate a decline in underlying demand. Expectations remain that the rally could extend into next year.
“A synchronized decline usually indicates the unwinding of a crowded position, not a sudden change in the actual demand for metals,” explained a professional investor in detail.
Furthermore, The Kobeissi Letter highlighted that gold has now maintained a quote above the 200-day moving average for about 550 consecutive trading sessions. This represents the second-longest streak ever recorded.
The only longer period dates back to the financial crisis of 2008, when gold remained above that level for about 750 sessions. During the current series, the price of gold has risen by 135%, surpassing the 91% gain recorded between 2009 and 2011.
In comparison, the 1986-1988 cycle lasted about 510 sessions, with a growth of 38%, while during the 1978-1980 period, gold increased by 209% over approximately 495 trading days.
“The momentum of gold remains historically strong,” added the post.
The thesis in favor of capital rotation
On the other hand, a market observer noted that sudden corrections in gold often weigh on sentiment and can trigger capital rotations.
“While some expect a rebound, these divergences suggest a deeper shift in market focus that could potentially benefit other assets like BTC,” stated Professor Crypto.
From a technical standpoint, analyst Michaël van de Poppe highlighted the presence of multiple bearish divergences across various timeframes, indicating a declining momentum despite recently reached new highs. He explained in detail that,
“Gold has corrected significantly... Although many do not speak of a prolonged correction, the fact that it has fallen below the previous all-time high is not positive. Many people will likely now believe that a new bullish movement is on the horizon, while the same group will blame Bitcoin for not growing. This is precisely the phase in which rotation occurs.”
In another post, Van de Poppe observed a bullish divergence on the daily BTC/gold chart, suggesting that Bitcoin is also set to outperform gold in the coming period.
“Similar periods of such bullish divergence: third quarter of 2024 (just before Bitcoin surpassed the $100,000 threshold), fourth quarter of 2022 (end of the bear market for Bitcoin). The great rotation is now at hand,” he added.
Consequently, the fluctuations between precious metals and crypto highlight increasing market volatility and greater uncertainty regarding capital flows. Despite the long-term trend of gold remaining historically solid, technical signals and relative performance suggest that investors are increasingly considering alternative assets.
It remains to be seen whether recent movements represent a temporary divergence or the early stages of a broader rotation.
