Global markets are experiencing a jittery start to the month, rattled by the continuing slump in gold, silver, and other precious metals. This volatility is fuelled by a combination of margin calls, momentum selling, and a perceived de-escalation of tensions between the U.S. and Iran, especially after Kevin Warsh’s nomination as the new Fed Chair on Friday.
Silver is down another 5.5% after Friday’s 30% plunge, heading for its biggest two-day loss since at least the 1980s. Gold has dropped another 3.4% after its 9% Friday meltdown marked its biggest single-day decline since 2013. Dealers attribute the pressure to silver futures funds in China and CME’s raised margin calls on key gold and silver futures contracts. Additionally, oil prices are down nearly 5% following remarks from Trump indicating potential dialogue with Iran.
These commodity declines have impacted equity markets. Wall Street’s Nasdaq futures are down nearly 1%, and the VIX “fear gauge” is rising. Attention will focus on tech majors like Alphabet, Amazon, and AMD, with scrutiny on their costs and AI strategies. This week also brings a deluge of U.S. macro data, including the ISM manufacturing index and non-farm payrolls.
Central bank meetings from the Reserve Bank of Australia (RBA), European Central Bank, and Bank of England are also anticipated. The RBA is expected to potentially increase interest rates by a quarter point to 3.85% to counter inflation. Despite the recent precious metals rout, gold and silver remain higher than their starting positions earlier in the year.
