Gold and Silver Extend Slide Following Record-Breaking Rally

United States - Ekhbary News Agency

Gold and Silver Extend Slide Following Record-Breaking Rally

Precious metal markets experienced further declines on Monday, as both gold and silver prices continued to fall, extending the losses incurred after a dramatic reversal of a recent rally. This rally had previously pushed both commodities to unprecedented record highs, making the subsequent downturn particularly sharp and notable. The market's sharp pivot has raised questions about the sustainability of recent gains and the future trajectory of these traditional safe-haven assets.

Gold prices plunged by 8% on Monday, with the ounce falling to $4,465. This marked the end of a streak of record-setting performances that had briefly seen the yellow metal approach nearly $5,600 just last week, before a partial recovery. Silver was not immune to the sell-off, dropping 7% following a significant 30% slide recorded on Friday. These movements underscore a growing sense of uncertainty within the global financial landscape.

Analysts attribute a significant portion of this widespread selling pressure to the announcement by U.S. President Donald Trump regarding his intention to nominate former Federal Reserve Governor Kevin Warsh as the successor to Fed Chair Jerome Powell. This nomination, pending Senate confirmation, is set to occur when Powell's term concludes in May. Although Trump stated he had not asked Warsh to commit to specific rate cut policies, the potential for a less predictable monetary policy stance from the central bank has triggered a reassessment of risk among investors, contributing to the market's volatility.

Furthermore, reports suggest that some of the earlier surge in gold and silver prices was fueled by speculative buying originating from China. Traders reportedly channeled significant "hot money" into the metals markets, as reported by Bloomberg. This influx pushed prices far beyond historical trading ranges, magnifying both the speed and the scale of the collapse witnessed last week. This phenomenon highlights the volatile nature of markets susceptible to rapid capital flows and speculative fervor.

On another front, the rally that preceded Friday's crash generated substantial gains for Russia. These gains are reportedly comparable in value to its sovereign assets that remain frozen in Western jurisdictions, estimated at around $300 billion. Unlike those frozen assets, Russia's gold reserves offer greater flexibility; they can be sold or pledged as collateral, potentially restoring significant financial capacity for the nation.

Earlier in the year, the precious metals market saw considerable activity. Gold prices surpassed $5,500 per ounce in late January, while silver reached an all-time high above $120. Despite the recent pullback, analysts at Deutsche Bank maintained a positive outlook on Monday, reiterating their expectation for gold to reach $6,000 later this year. This sustained optimism suggests a belief in the long-term value of gold as a safe-haven asset, even amidst short-term market fluctuations.

Mohit Kumar, an analyst at Jefferies, commented on the gold sell-off, describing it as an "unwind" of a "crowded" trade. Quoted by The Guardian, he explained that gold had become one of the most over-occupied positions, with positioning scores reaching close to 8 on a scale of -10 to 10 just last week. He noted that the price action over the preceding two days had brought this positioning down to just above 4. "Still on the long side but much less crowded, suggesting that the bulk of weaker hands have been cleaned out," Kumar stated. This dynamic illustrates how markets can experience sharp corrections after periods of excessive investor concentration, often clearing out less committed participants.

It is worth noting that precious metals experienced a significant surge in 2025, with gold posting its largest annual gain since 1979. This historical context underscores the enduring appeal and strategic importance of precious metals as an investment class, notwithstanding the short-term volatility that can characterize their markets.

Ekhbary News Agency