Gold and Silver Prices Plummet Amid Dollar Strength and Market Tensions
Global markets experienced a significant decline 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 price of gold fell by 5.01%, reaching $4,649.18 per ounce at 03:11 GMT, while U.S. gold futures for February delivery dropped by 2.31% to $4,635.30 per ounce.
Gold had previously reached an unprecedented high of $5,594.82 per ounce last Thursday before the recent downturn.
Meanwhile, silver suffered an even steeper decline, plummeting over 10% to $76.04 per ounce after hitting a historic peak of $121.64 on Thursday.
The platinum price also fell by 6.07% to $2,065.79 per ounce after reaching a high of $2,918.80 on January 26.
Daniel Albana, a financial market analyst at First Financial Markets, commented on the reasons behind this sharp decline, stating:
"What we are witnessing goes beyond traditional profit-taking, as it follows an unhealthy vertical surge in gold prices of over $400 in just one day, leaving banks and investors little time to manage their risks."
He added that the market experienced "forced liquidations and a market cleanout" due to increased margins at brokerage firms, where those unable to inject additional liquidity to cover their positions were compelled to sell quickly, exacerbating the panic-driven decline.
Albana explained that the rapid drop from the $5,400-$5,500 range to near $4,700 per ounce resulted in substantial losses for investors who had bought at the peaks and used high leverage. He noted that the market's pricing in of Warsh's tightening monetary policy has intensified 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 a record surge not seen in decades.
