Spot gold fell by as much as 8% and is now down nearly 20% from the all-time high it reached on Thursday. Silver plunged as much as 14.6% on Monday, following an intraday decline in the previous session that marked the steepest on record, News.Az reports, citing Bloomberg.
Precious metals had surged to unprecedented highs, surprising even experienced market participants. The already-strong rally accelerated sharply in January as investors rushed into gold and silver amid renewed concerns over geopolitical tensions, currency debasement, and the independence of the Federal Reserve. Additional momentum came from a wave of buying by Chinese speculators, which added further froth to prices.
How aggressively Chinese investors buy on dips is expected to play a key role in shaping market direction from here. Although Shanghai benchmark prices continued to decline after markets opened, they were still trading at a premium to international prices. Over the weekend, buyers crowded China’s largest bullion market in Shenzhen to purchase gold jewelry and bars ahead of the Lunar New Year holiday.
China’s domestic markets will close for just over a week starting Feb. 16 for the holidays.
The sharp selloff on Friday was triggered by news that U.S. President Donald Trump would nominate Kevin Warsh to lead the Federal Reserve. The announcement pushed the dollar higher and dented sentiment among investors who had bet that Trump would tolerate a weaker currency. Traders view Warsh as the most aggressive inflation fighter among the leading candidates, raising expectations of tighter monetary policy that would support the dollar and weigh on dollar-denominated bullion.
As of 2:03 p.m. Singapore time, gold had fallen 6.9% to $4,554.57 an ounce, while silver dropped 9.6% to $77.0211. Platinum and palladium also retreated. The Bloomberg Dollar Spot Index rose 0.2% after gaining 0.9% in the previous session.
