Gold and silver fall sharply after record rally: Investors react; markets stay volatile
Gold and silver prices fell sharply after reaching record highs, driven by Kevin Warsh’s nomination as Federal Reserve chair, a stronger US dollar, and changes in trading rules. Asian and European markets reacted with losses, while crude oil prices also declined. Despite the drop, gold remains around 70% higher than last year, maintaining its safe-haven appeal.
Prices slide
Spot gold fell almost 10%, while silver dropped as much as 15% on Monday. Gold traded around $4,750 an ounce, down 3% for the day. Silver was near $82 an ounce, down 3.4%. Analysts said Kevin Warsh’s nomination as the next chairman of the Federal Reserve was the main reason for the sharp fall. Changes in trading rules on a major exchange also made it harder for speculators to trade, adding pressure on prices.
Global markets
Asian stocks fell after the drop in precious metals. South Korea’s Kospi fell 5%, Hong Kong’s Hang Seng lost 3%, and Japan’s Nikkei 225 dropped over 1%. European markets started lower, but the UK’s FTSE 100 recovered to rise 0.5% by midday. Mining companies were affected, with gold miners like Fresnillo and Endeavour Mining losing 2% to 3%.
Dollar's value
Crude oil prices fell nearly 5%. The fall followed an agreement by major producers to keep output steady and easing tensions between the US and Iran. At the same time, the US dollar rose after Warsh’s nomination. A stronger dollar makes commodities priced in dollars more expensive for buyers elsewhere. This contributed to the drop in both metals and oil prices.
Gold’s value
Even after the fall, gold is about 70% higher than a year ago. Only around 216,265 metric tons of gold have ever been mined, making it rare and valuable. Gold’s price had risen quickly in the past months because central banks bought more gold and investors were worried about trade tensions and other global risks. Analysts say prices can fall when investors sell to lock in profits or when fears ease.