Collapse of Gold and Silver Prices Amid Rising Dollar and Global Market Tensions
Global markets witnessed a sharp decline in gold and silver prices today, Monday, as the dollar strengthened and investors expressed concerns about Kevin Warsh, President Donald Trump's nominee for the Federal Reserve chair, regarding interest rates.
Spot gold fell by 5.01% to $4649.18 per ounce by 03:11 GMT, while U.S. gold futures for February delivery dropped by 2.31% to $4635.30 per ounce.
Gold had previously reached an unprecedented record level of $5594.82 per ounce last Thursday before the wave of declines began.
Silver experienced an even larger collapse, dropping over 10% to $76.04 per ounce, after hitting a historic peak of $121.64 last Thursday.
Platinum also declined by 6.07% to $2065.79 per ounce after reaching its highest level of $2918.80 on January 26.
Daniel Albana, a financial market analyst at First Financial Markets, analyzed the reasons for the sharp drop, stating:
"What we witnessed went beyond mere profit-taking, as it followed an unhealthy vertical rise in gold exceeding $400 in one day, leaving banks and investors little opportunity to absorb risks."
He added that the market experienced "forced liquidations and market washing" due to margin increases by brokers, where those unable to inject additional liquidity to cover their positions were forced to sell quickly, exacerbating the downward wave under panic conditions.
Albana explained that the rapid slide from levels of $5400-$5500 to near $4700 per ounce led to significant losses for investors who bought at the peaks and used high leverage, adding that the market's pricing of Warsh's tightening monetary policy increased psychological pressure on the metals.
These developments come as investors await the trajectory of U.S. monetary policy, amid mixed expectations regarding the future of the dollar and gold, following an unprecedented record rise that the yellow metal has not seen in decades.
