Gold and silver prices saw gains on Monday after a “meltdown” in metals markets jolted investors around the world.
gold On Monday, the price fell 8% to $4,465 an ounceending a run of record highs that reached nearly $5,600 last week. It later recovered somewhat, but is still down 3% at $4,718.35.
Silver fell as much as 7% after a 30% retreat on Friday, but settled down nearly 3.3% at $81.75 an ounce.
A partial recovery in the metals market supported the UK’s blue chip FTSE 100 stock index, which broke the 10,300 mark for the first time.
Gold and silver were damaged Consecutive highs in recent weeksinvestors sought safer assets amid rising geopolitical tensions and fears about the independence of the US Federal Reserve.
Friday’s sell-off was triggered after Donald Trump said he would run for the nomination Kevin Warsha former Fed governor and respected central banker, is the next chairman of the Federal Reserve.
If confirmed by the Senate, Warsh will replace Jerome Powell when his term ends in May. Trump said Friday that he had not asked Warsh to commit to a rate cut.
Susanna Streeter of broker Wealth Club said the metals sell-off reflected relief that a “Trump cheerleader” had not been installed at the central bank. “Now that financial industry heavyweight Kevin Warsh has been anointed as a successor, with deep Fed experience, he’s not expected to be a pushover and that’s led to this big retreat of safe haven positions,” she said.
Michael Brown, senior research strategist at Pepperstone, described Friday’s selloff as a “meltdown in the metals space.”
Industrial metals, which had led the metals rally, also fell on Monday, with both platinum and copper lower.
Meanwhile, Bitcoin also recovered some of its losses over the weekend, rising 1.8% against the US dollar, although the cryptocurrency is still trading below $80,000, far from last year’s peak of $125,000.
Oil prices fell 4% as investors heeded the signs Geopolitical tensions between the US and Iran are easing. Brent crude was trading at around $65.24 a barrel, down from last week’s high of $71.
But the US stock market opened higher on Monday, with the S&P 500 share index up 0.4%. The dollar, which fell in the second half of January, rose 0.43% against a basket of rivals.
As gold and silver prices continue to slide, Deutsche Bank analysts said Monday they expect the metal to reach $6,000 this year.
Mohit Kumar, broker at Jefferies, said the gold sell-off looked like a “relief” of “congested” trade.
“Gold is one of the most crowded positions, reaching position 8 [on a scale of -10 to 10] On our indexes last week,” he said. Still on the long side but with much less crowding indicating that weak hands have been cleaned up.
Despite heavy falls in recent days, gold is still up nearly 65% over the past year, while silver is up more than 120%.
