Year-End Profit Taking Triggers Broad Pullback in U.S. Equities and Precious Metals

Market Overview

On Monday, both precious metals and U.S. equities, which had previously enjoyed strong upside momentum, entered a corrective phase. With the close of 2025 approaching, traders began trimming exposure to mega-cap technology stocks. Heavyweights such as Tesla, NVIDIA, and Meta all moved lower.

Tesla underperformed its peers, sliding 3.27% to lead declines among the “Magnificent Seven.” The selloff was primarily driven by news that the value of its supply contract with South Koreas L&F Co. had been reduced by 99%, dealing a significant blow to investor sentiment.

On the macro and FX front, U.S. Treasuries saw modest safe-haven inflows, pushing the 10-year Treasury yield down to 4.11%. The U.S. dollar traded sideways in a narrow range. Meanwhile, offshore USD/CNH staged a “dip-then-rebound” move, successfully reclaiming the 7.00 level, underscoring resilient underlying demand for the yuan.

Commodities and Crypto See Heightened Volatility

Precious Metals: Forced Liquidation Drives Sharp Declines

Silver triggered a wave of profit-taking after briefly breaking above the USD 80 level during the Asian session. Prices plunged more than 8% in a single day, at one point falling below USD 71. Spot gold followed suit, tumbling roughly 4.5% and marking its largest single-day decline since late October, with prices sliding toward the USD 4,300 area.

Energy Markets Buck the Trend

In contrast to the weakness in metals, WTI crude oil advanced 1.6%, supported by sector-specific buying interest.

Cryptocurrencies: Sharp Inverted V Reversal

The crypto market experienced extreme intraday volatility within a 12-hour window. Bitcoin briefly surged above USD 90,000 before rapidly reversing lower, falling below USD 87,000. Ethereum mirrored this inverted V-shaped pattern, retreating nearly 5% from its intraday highs.

Key Themes to Watch

● No Bears in Sight: Wall Street Turns Unanimously Bullish on U.S. Equities for 2026

According to a Bloomberg survey, all 21 surveyed strategists project further upside for U.S. equities in 2026, with the S&P 500 expected to rise an average of 9%. If realized, this would mark the fourth consecutive year of gains, the longest winning streak in nearly two decades.

Notably, previously bearish institutions such as JPMorgan have fully reversed their stance, lifting their year-end target to 7,500. That said, veteran strategists caution that unanimous optimism itself can be a warning sign. A minority of cautious voices continue to flag risks tied to elevated valuations, Federal Reserve policy uncertainty, and potential tariff-related shocks.

● Silver Sell-Off Raises Red Flags

Veteran hedge fund manager Campbell warned that silver faces multiple short-term headwinds, including tax-driven year-end selling, pressure from a stronger U.S. dollar, higher margin requirements reducing leverage, technically overbought conditions, and substitution risk from copper.

In addition, the January rebalancing of the Bloomberg Commodity Index is expected to force passive funds to liquidate positions equivalent to roughly 9% of open interest in the silver futures market, potentially amplifying downside pressure.

Data and Events to Monitor (GMT+8)

22:00 (US)

• October FHFA House Price Index (MoM)

• October S&P CoreLogic Case-Shiller 20-City Home Price Index (YoY, NSA)

22:45 (US)

• December Chicago PMI

Overnight

03:00 (US)

• Federal Reserve releases minutes from its latest monetary policy meeting