Plummeting Gold and Silver Prices Amid Strong Dollar and Global Market Tensions
Global markets saw a significant drop in gold and silver prices on Monday, driven by a strengthening dollar and investor concerns regarding Kevin Warsh, President Donald Trump’s nominee for the Federal Reserve chair, and his stance on interest rates.
The spot gold price fell by 5.01% to $4,649.18 per ounce as of 03:11 GMT, while U.S. gold futures for February delivery dropped 2.31% to $4,635.30 per ounce.
Gold had reached an unprecedented high of $5,594.82 per ounce last Thursday before the subsequent decline began.
In contrast, silver experienced an even steeper decline, plummeting over 10% to $76.04 per ounce, after hitting a record peak of $121.64 on Thursday.
Additionally, platinum fell by 6.07% to $2,065.79 per ounce, having reached its highest level of $2,918.80 on January 26.
Daniel Albana, a financial market analyst at First Financial Markets, commented on the drastic drop, stating:
"What we are witnessing goes beyond a typical profit-taking scenario, as it follows an unhealthy vertical rise in gold prices, which increased over $400 in a single day, leaving banks and investors little time to manage risk."
He added that the market faced "forced liquidations and a washout" due to increased margins set by intermediaries, where those unable to inject additional liquidity to cover their positions were compelled to sell quickly, exacerbating the panic-driven declines.
Albana explained that the rapid decline from the $5,400-$5,500 range to around $4,700 per ounce resulted in substantial losses for investors who bought at peaks and used high leverage, noting that market sentiment regarding Warsh's tightening monetary policy added psychological pressure on precious metals.
These developments come as investors await clarity on U.S. monetary policy, amid mixed expectations regarding the future of the dollar and gold following an unprecedented surge not seen in decades.
