The collapse in gold and silver prices comes after a dizzying rise that took both precious metals to historic highs. The drop in the value of both metals will be caused by the news that Donald Trump chose Kevin Warsh as the next president of the Federal Reserve.
Precious metals continued to lose on Monday, following the brutal sell-off that took place on Friday.
O “spot” gold fell 6.4%standing at around $4,581 per ounce, after falling more than 10% on Friday. In the consumer price index, the price of gold is at 129,78 €/gra drop in 15.13% compared to €152.91/gr on Thursday, 29.
Despite the retreat, the yellow metal remains with a rise of about 10% since the beginning of the year. At the beginning of October, one had taken gold to 111€/gr.
A talk “spot” recorded a drop of 9.50%, standing at around 77.10 dollars per ounce, after having sunk 36% on Friday. At AORP, consumer silver was quoted at €3,373.16/Kg on Thursday, compared to €2,295.70/Kg recorded this Monday, a drop of 31.94%. Silver prices have risen by 3% since the beginning of the year.
According to , the falls appeared after Donald Trump announced the appointment of Kevin Warsh to lead the Federal Reserve after the end of the term of the current Fed chairman, Jerome Powellin May.
Warsh is seen as more restrictive and more likely to preserve the central bank independence than other candidates, a perspective that boosted the US dollar to higher values and penalizing raw materials denominated in dollars, such as gold and silver.
Most importantly, Warsh advocates a balance reduction of the Federal Reserve, which would ease fears of a weaker dollaroe helps explain recent falls in gold and silver prices, says Vishnu Varathandirector of research at Japanese financial company Mizuho.
Before settlement, gold had registered a dizzying rise over the last year, fueled by massive purchases by central banks and geopolitical tensions. These forces remain and could continue to support the rise in prices, even with the slowdown in speculation, says Insider.
As stated Daniel Hynessenior raw materials analyst at ANZ, told Bloomberg TV, as widespread geopolitical tensions continue to support the gold market, although it is expected that the price volatility stay elevated.
“A general disorder of world order that we constantly hear about, and the role of the United States within it, has really been at the heart of this search for refuge, and I don’t see it ending anytime soon“, disse Hynes.
However, analysts continue to warn about silverwhose earnings have largely surpassed gold in recent months essentially due to the Chinese speculative demand.
Second Ole Hansendirector of raw materials strategy at Saxo Bank, the gold is susceptible to a pullback given the rise in prices in recent weeks, but the drop in price should be offset by renewed demand. THE silver, however, may have difficulty keeping up with the pace of gold.
“Your strong dependencein normal times, could become an obstacle, as some end users, particularly in the solar sector, are increasingly looking for alternative materials to protect the margins,” Hansen wrote.
