Precious Metals Slide As China AI News Sends Wall Street Tumbling

 

Precious Metals Slide As China AI Company Sends Tech Stocks Tumbling 

(Bullion News Network) – Gold and silver prices dropped this morning after a series of strong performances last week. The price action coincides with a similarly bearish turn on Wall Street, where technology stocks dove on the news of renewed competition in the AI market coming out of China. Over the weekend, Chinese hedge fund High-Flyer released DeepSeek, an AI model that experts say poses a significant challenge to American dominance in the global artificial intelligence market. The Nasdaq, an exchange heavy on technology stocks, shed 3.5% – its biggest loss of 2025. Leading the downward charge was Nvidia, a company whose powerful GPUs served as the backbone for the USA’s AI boom last year. Nvidia logged the biggest loss in U.S. stock market history today as American traders reacted to the disruptive Chinese AI development. 

Chinese startup DeepSeek’s launch of its latest AI models, which it says are on a par or better than industry-leading models in the United States at a fraction of the cost, is threatening to upset the technology world order https://t.co/Gvmji9bsSQ pic.twitter.com/G3UGVagL21

— Reuters (@Reuters) January 28, 2025

Driving the panic on Wall Street is DeepSeek, a new Chinese AI platform developed by hedge fund High-Flyer. According to a Chinese research report, the large language model (LLM) is capable of rivaling Open AI’s models at a fraction of the power costs. If true, this poses a significant problem for American dominance in the space. Nasdaq technology stocks were the hardest hit, but the entirety of Wall Street dropped on the heels of the news. Over the weekend, App Store downloads of DeepSeek outpaced Open AI’s ChatGPT. 

Precious metals also dropped on the news. Gold dropped to $2,731.81/ozt before marginally recovering to end the day down nearly $30/ozt at $2,744.77. Silver prices suffered even more, with the precious metal briefly dipping to $29.80/ozt before fighting back to end the day at around $30.30 per troy ounce. The price action drove the gold-silver ratio higher to over 90.60:1. So far, it does not seem that Wall Street’s slide is causing a significant flight to safe haven assets like gold and silver, though this could change if the stock market rout continues over the course of the next two weeks. 

While DeepSeek poses an undeniable threat to American dominance in the explosive artificial intelligence sector, analysts say that all may not be lost for the U.S. technology sector. The Motley Fool argues that the Chinese company’s choice to make DeepSeek open source may allow American companies to emulate the power-saving efficiency of the platform. Additionally, the disruptive nature of DeepSeek’s power efficiency could actually be a boon to stocks like Nvidia. The popularity and accessibility of AI under the new Chinese platform might lead to greater demand for U.S. power sources, including Nvidia’s industry-leading GPUs. 

Adding to the confusion is that DeepSeek became public just weeks after President Trump announced Project Stargate, a $500 billion investment in artificial intelligence intended to make the United States a powerhouse in AI technology development. As world powers race for dominance in the growing AI sector, it’s no secret that American companies will be eager to leverage the increased funding to compete with DeepSeek. 

Both gold and silver will begin the week in the red as markets react to a disruptive new AI platform from China.