Introduction
Monday started rough for the FTSE 100—down 0.5% at the open as gold cratered 9% and silver crashed 16%. But by lunchtime? The UK’s blue-chip index had clawed back into positive territory, up 0.4%. While Asian markets suffered their worst day since Trump’s “liberation day” tariffs, and tech stocks continued their slide, London’s defensive heavyweights did what they do best: held the line. Here’s what happened when precious metals went haywire and why the FTSE 100 managed to dodge the worst of it.
How Bad Was the Global Sell-Off?
Pretty grim, especially in Asia. South Korea’s Kospi index—basically the AI trade’s report card—plunged over 5%. Hong Kong’s Hang Seng dropped 2.2%. Investors were dumping anything risky or commodity-linked as fears about overvalued tech stocks and stretched precious metals positions triggered a mass exodus.
The culprit? A toxic mix of profit-taking after precious metals hit record highs, leveraged positions unwinding fast, and growing anxiety that AI valuations have run too hot. When momentum flips in leveraged markets, it flips hard.
Gold and Silver: What Just Happened?
Let’s talk about the metals meltdown. Gold, which had been on a tear, nose-dived 9% to $4,403 an ounce during Asian trading hours. Silver? Even worse—down 16% to under $72 an ounce, following a brutal 30% crash on Friday.
John Wyn-Evans from Rathbones called it “a spectacular unwinding of leveraged positions.” Translation: traders who’d piled into gold and silver with borrowed money got squeezed, triggering panic selling. By the time European markets opened, both metals had recovered some losses—silver nearly erased its drop entirely, whilst gold staged a partial comeback.
This wasn’t about fundamentals changing overnight. It was about positioning and liquidity. When everyone’s leaning the same direction and someone shouts “fire,” the exit gets crowded fast.
FTSE 100 Miners Take a Beating (Then Bounce)
Unsurprisingly, London’s precious metals miners had a wild ride. Fresnillo—a major gold and silver producer—plunged over 7% at market open before clawing back losses. Endeavour and Antofagasta followed similar patterns: sharp drops, then recoveries as metal prices stabilised.
The whiplash was real. One minute you’re celebrating record highs, the next you’re watching double-digit percentage drops. That’s what happens when leveraged momentum trades unwind all at once.
Why the FTSE 100 Held Up Better Than Most
Here’s where the FTSE 100’s boring reputation became an advantage. The index is packed with defensive stocks—insurers, consumer goods giants, healthcare—that investors flock to when things get choppy.
Aviva and Beazley (insurers) both jumped over 2%. Unilever, that reliable cash-flow machine, climbed 2.3%. These aren’t sexy growth plays, but when markets panic, consistency beats excitement every time.
Meanwhile, tech stocks continued their losing streak. The Nasdaq futures were down 1%, weighed down by disappointing earnings from AI firms and fears that cloud growth is slowing. Microsoft’s recent update showing deceleration in its cloud division didn’t help sentiment.
What’s Driving All This Volatility?
As Deutsche Bank’s Jim Reid put it: “It’s typical of the 2026 constant stream of complicated news flow.” Translation: markets are juggling multiple concerns simultaneously.
You’ve got overextended tech valuations being questioned, precious metals coming off record highs with leveraged positions unwinding, AI earnings not quite living up to the hype, and echoes of January’s volatility (which still managed to deliver broad-based gains despite the chaos). When markets hit these crossroads, volatility spikes and defensive positioning makes sense. The question now is whether this is a healthy correction or the start of something bigger.
Conclusion
The FTSE 100’s Monday comeback wasn’t about optimism—it was about composition. Whilst Asian markets cratered and precious metals whipsawed, London’s defensive tilt kept it afloat. Gold and silver traders are licking their wounds after a brutal deleveraging, and tech investors are reconsidering stretched valuations. For now, boring wins. Keep an eye on how precious metals stabilise and whether tech can find its footing—both will shape what comes next.
FAQ
Q1: Why did gold and silver crash so dramatically?
A: A rapid unwinding of leveraged positions triggered panic selling. After hitting record highs, traders who’d borrowed to buy were forced to sell, amplifying downside moves. It’s more about positioning than changing fundamentals.
Q2: Why did the FTSE 100 recover when other markets didn’t?
A: The FTSE 100’s heavy weighting towards defensive stocks—insurers, consumer goods, healthcare—made it more resilient. When markets panic, investors rotate into stable, cash-generating businesses, which the FTSE 100 has in spades.
Q3: Are tech stocks still a good investment after this sell-off?
A: That depends on your time horizon and risk tolerance. Valuations were stretched, and some AI earnings haven’t matched expectations. If you believe in long-term tech growth, pullbacks can be opportunities—but near-term volatility is likely.
Q4: Will gold prices recover from this drop?
A: Possibly. The sell-off was driven by positioning and liquidity, not a fundamental shift in gold’s appeal as an inflation hedge or safe haven. If the long-term case remains intact, bargain hunters may step in.
Q5: Should I worry about more market volatility ahead?
A: Probably. Multiple crosscurrents—tech valuation concerns, geopolitical uncertainty, commodity volatility—suggest choppiness will continue. Defensive positioning and diversification make sense in this environment.
DISCLAIMER
Effective Date: 15th July 2025
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