Gold’s volatility could keep retail investors on the sidelines, raising the risk of further downside - DeCarley’s Garner

In an interview with Kitco News, Carley Garner, co-founder of DeCarley Trading, said she still prefers to sell rallies in gold; however, she noted that the wild price swings are proving exceptionally difficult for traders, and nobody is making any money.

“It’s a really high-risk market at this point,” Garner said, noting that extreme volatility and elevated margins have pushed many traders to the sidelines. “Most people just don’t have the risk appetite anymore.”

Garner explained that the rapid price swings in futures and options markets have made positioning increasingly complex. Even traders who entered with bearish bets during this correction have found themselves unintentionally on the wrong side because of the speed of market reversals.

At the same time, the high cost of options is limiting participation. “It’s so expensive to just buy options outright,” she said, adding that even micro futures contracts are generating outsized gains and losses in short periods.

While leveraged trading activity has declined, Garner noted that investors in physical bullion and ETFs may have more staying power. However, even these markets are not immune to stress.

“There’s clearly some panic selling,” she said. “I’m not sure anybody’s winning right now.”

She added that declining liquidity may be exacerbating volatility across commodities, creating a feedback loop in which traders avoid the market, further reducing stability.

She said that in this environment, the gold market could struggle to regain the momentum it had at the start of the year, and it may take some time before retail investors are ready to reenter the market, while traders are still reticent about buying and trading gold futures.

She added that the gold market still has room to fall. Despite the recent sharp pullback, Garner emphasized that prices remain historically elevated.

“Even after this correction, gold has still put together a heck of a run,” she said.

Looking at longer-term charts, she suggested the recent decline may feel more dramatic than it actually is in context.

“It feels like the end of the world, but it’s really just a blip compared to that parabolic rally.”

However, Garner said she remains cautious on the metal over the near term.

“I’m not bullish gold,” she said. “I just really can’t see these levels holding.”

She expects that gold could attempt a near-term recovery, potentially retesting previous resistance levels, but any rally may present a selling opportunity.

“If we get a bounce — maybe driven by geopolitical headlines — I’d be more interested in playing the downside,” she said, pointing to a potential re-entry zone near prior trendline resistance.

Energy is driving the entire commodity complex

Garner stressed that crude oil is currently the dominant force across all commodity markets, including gold and agriculture.

“No matter what you’re trading — metals, grains, livestock — you’re really just trading crude oil right now,” she said.

Oil’s volatility has not only increased trading risks but also driven correlations across asset classes. For example, she highlighted a strong relationship between oil and currencies like the Japanese yen, which has weakened as energy prices rise.

Instead of buying expensive crude oil puts, Garner said her firm has looked for alternative expressions of the same macro theme.

“We bought yen calls instead,” she explained. “If crude rolls over, the yen should recover.”

Agricultural markets also tied to oil dynamics

In agriculture, Garner expects limited upside despite ongoing supply concerns.

She explained that grains have become highly correlated with energy markets, with wheat showing an unusually strong relationship to oil prices.

“I don’t think grains are just going to grow legs and keep running,” she said, adding that price ceilings may already be in sight for corn, wheat, and soybeans.

Across commodities, Garner said traders are increasingly adopting defensive strategies, favoring low-cost options, and avoiding large directional bets.

“We’re just keeping it cheap, low risk, no margin,” she said.

In fact, she suggested that staying out of the market altogether may be the smartest move for many participants.

“When it’s this wild, most people are losing money,” she said. “If you’re on the sidelines, don’t feel bad — that’s not a bad place to be.”