Markets enter a correction phase as volatility rises and geopolitical risks re-emerge
Markets selloff across the board as investors de-risk and balance their portfolios heading into the weekend
The past 24 hours have marked a notable shift in market tone, with price action across asset classes increasingly resembling a classic correction environment. Volatility has risen, momentum has faltered, and investors have begun to reassess risk after a period of strong, largely uninterrupted gains. Importantly, this does not yet look like panic or systemic stress. Instead, it reflects a market that has become more sensitive to downside risks at a time when valuations are stretched and geopolitical uncertainty is intensifying.
Heading into the weekend, geopolitics have moved back to the forefront of investor concerns, with expectations growing that the US could escalate its stance toward Iran. While markets have become accustomed to a high level of geopolitical noise, the prospect of renewed escalation has encouraged a degree of portfolio de-risking, particularly in assets that had become crowded on the long side. This has contributed to the risk-averse tone seen across equities, commodities and currencies, as investors trim exposure ahead of potential headline risk.
Precious Metals: a long-overdue correction after a speculative surge
The clearest example of this recalibration has been in the precious metals space. Gold and silver had entered a highly speculative phase, with gold rallying nearly 20% and silver more than 30% over the past ten days alone. That advance occurred with little in the way of consolidation or meaningful pullbacks, leaving prices vulnerable once sentiment shifted. Against that backdrop, the near-10% pullback in gold overnight, while striking, fits the profile of a healthy correction rather than a breakdown.
Crucially, this move does not undermine the longer-term structural appeal of precious metals. Central bank buying remains strong, and gold in particular continues to benefit from its role as a hedge against political, fiscal and monetary uncertainty. However, when assets rise so quickly without testing demand, markets inevitably begin to question whether levels have become “too punchy.” The recent correction reflects that reassessment, a reminder that even in strong trends, price discovery still matters. In the days ahead, precious metals may remain volatile as investors look to establish where genuine support emerges.
Gold and Silver daily charts
Past performance is not a reliable indicator of future results.
Equities: earnings, valuations and a reality check
Equity markets are also showing signs of fatigue. Geopolitical concerns are coinciding with the heart of earnings season, a period when valuation scrutiny tends to intensify. While some of the major technology names have delivered solid results - Apple’s latest numbers being a case in point - forward-looking commentary has raised fresh questions. Warnings around rising component costs and potential margin pressure have reignited investor debate about whether current valuations adequately reflect future risks.
This concern is amplified by the scale of investment already committed to AI and next-generation technologies. Markets have priced in significant future returns from these projects, but those returns remain largely back-end loaded. As a result, investors are increasingly asking how much further these stocks can run before expectations need to be tempered. The recent pullback suggests that markets are beginning to differentiate between strong fundamentals and stretched assumptions, rather than blindly rewarding growth narratives.
Nasdaq 100 daily chart
Past performance is not a reliable indicator of future results.
What to watch in the week ahead
Looking ahead, the coming week is likely to be defined by a continued tug-of-war between correction dynamics and underlying structural support. Geopolitics will remain a key swing factor, particularly if tensions in the Middle East escalate further or spill into energy markets. Any sharp move in oil prices could quickly feed into broader risk sentiment.
Earnings season will continue to dominate equity market direction, with investors paying close attention not just to headline results, but to guidance, cost pressures and capital expenditure plans. Companies exposed to AI, technology hardware and global supply chains will be especially sensitive to changes in sentiment.
In commodities, precious metals are likely to remain volatile as the market digests recent excesses and searches for equilibrium. Further consolidation would not be surprising, even as the longer-term bullish case remains intact. Meanwhile, broader risk assets may struggle to regain momentum until volatility subsides and investors gain greater clarity on both geopolitical risks and earnings durability.
Bottom Line
Markets appear to be entering a phase of consolidation and reassessment, rather than the start of a full-blown risk-off episode. The correction we are seeing reflects elevated uncertainty, stretched valuations and crowded positioning, not a collapse in fundamentals. However, with geopolitics back in focus and volatility rising, investors are likely to remain cautious in the near term, making the coming week a critical test of whether this correction stays orderly or evolves into something more disruptive.