Silver prices experienced a sharp decline, reversing gains from the previous two days, as the precious metal struggles to establish a price floor after significant market turbulence. Gold also saw a downturn amid uncertain trading conditions. Spot silver fell by 15 per cent on Thursday, after a brief recovery above $US90 an ounce during early trading in Asia. Spot gold also dropped, declining 3.2 per cent.
Precious metals had surged last month, fuelled by speculative trading, geopolitical tensions, and concerns about the independence of the US Federal Reserve. However, this rally abruptly ended late last week, with silver recording its largest ever daily drop on Friday and gold experiencing its most significant plunge since 2013. Market participants are closely monitoring the potential policy implications of Kevin Warsh’s nomination as US Federal Reserve chair.
President Donald Trump indicated that he would not have nominated Warsh if he had expressed intentions to raise interest rates. In an interview with NBC News, Trump suggested there was “not much” doubt the Fed would lower rates again – typically a positive influence for precious metals, which do not provide interest.
Analysts at Standard Chartered, including Sudakshina Unnikrishnan, noted that “Price action is likely to remain volatile until there is greater certainty on the monetary policy outlook.” They added that some short-term volatility stems from investors liquidating their holdings in exchange-traded products. Despite this, they maintain a positive outlook, expecting an eventual “rebuild to the upside” as “structural drivers remain intact.” As of 10:58am in Singapore, spot gold was down 2.5 per cent at $US4839.45 an ounce, while silver was down almost 14 per cent at $US75.8875.
