Gold and silver have taken a significant hit recently, marking a notable decline after their record-breaking highs. On Monday, gold dropped about 5% to $4,611.4 per ounce, following a nearly 10% plunge on Friday. Silver wasn’t spared either; after a staggering 30% fall—the worst since March 1980—it fell another 10% to around $76.11 per ounce.
This sell-off surprised many. Analysts point to a combination of factors, notably a stronger U.S. dollar and profit-taking after the metals had surged. José Torres, a senior economist at Interactive Brokers, attributed the pullback to a shift in market sentiment after recent news regarding a change in Federal Reserve leadership. When former Fed Governor Kevin Warsh was nominated to replace Jerome Powell, it sparked optimism for tighter monetary policies, which often negatively impacts gold prices.
Christopher Forbes from CMC Markets noted that this drop may be a typical correction following an extraordinary rally. “Profit-taking and fresh geopolitical headlines have added pressure,” Forbes explained. Indeed, as the dollar strengthened, gold became less appealing to foreign investors. A stronger dollar typically makes commodities priced in dollars more expensive for other countries, reducing demand.
Interestingly, despite the recent downturn, both gold and silver are still higher this year compared to last. Gold is up around 8%, while silver has grown about 16%. Last year, gold surged about 65%, and silver skyrocketed by 145%, driven by safe-haven demands during global uncertainty.
Looking ahead, there’s still debate among experts. Some believe that if the Fed continues its current direction, we could see gold revisit its recent peaks, especially as inflation and growth remain unpredictable. The market is waiting to see how Warsh’s policies might unfold.
Regardless of the short-term volatility, investing in precious metals continues to be a topic of keen interest, reflected in social media discussions and market analyses. Many are closely following these developments to spot potential buying opportunities as prices fluctuate.
For those wanting to dive deeper into the complexities of gold and silver market dynamics, check out resources from CNBC or the latest reports from financial analysts.
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