Wild fluctuations in financial markets subsided as Wall Street opened for trading on Monday. U.S. stocks remained relatively stable following gains in Europe and significant losses in Asia, with gold and silver prices rebounding from earlier declines.
The focal point in financial markets once again was precious metals, where momentum abruptly halted after gold’s value nearly doubled in the past year. Gold temporarily dipped below $4,500 US per ounce overnight, marking a drop of over $1,000 from its recent peak. It later recovered some of the losses, settling at $4,725.00, representing a 0.5% decrease from Friday.
Silver experienced even more volatility, swinging from a nine percent loss overnight to a three percent gain. The surge in gold and silver prices was driven by investors seeking refuge in safer assets amidst concerns such as a potentially less independent Federal Reserve, an overvalued U.S. stock market, tariff threats, and escalating government debts globally.
The prices of gold and silver plummeted on Friday, with silver witnessing a sharp 31.4% decline. Some analysts attributed this drop to President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve chair. Warsh’s background as a former Fed governor led some investors to speculate that he might maintain high interest rates to combat inflation, reducing the appeal of gold and silver as safe havens.
However, there is skepticism on Wall Street regarding this interpretation, as it is believed that Trump anticipates Warsh to lower interest rates, aligning with the president’s demands. The Fed chair’s decisions significantly impact the global economy and markets by influencing U.S. interest rates, which in turn affect various investments and strive to balance job market growth with inflation control.
According to Darrell Cronk, the chief investment officer for Wealth & Investment Management at Wells Fargo, the recent downturn in gold and silver prices may primarily reflect traders unwinding leveraged positions betting on continued price surges, rather than a fundamental shift in demand for metals.
At the start of the trading day, the S&P 500 dipped by 0.1%, heading towards its fourth consecutive loss. Meanwhile, the Dow Jones Industrial Average rose by 0.2%, and the Nasdaq composite declined by 0.3%. Notably, prominent technology stocks, including Nvidia, faced losses, with the Asian markets experiencing more significant declines, particularly in AI-related companies.
Sources:
– [Gold hits record $5,000 US an ounce as months-long rally continues amid global turmoil](https://www.cbc.ca/news/business/gold-record-global-upheaval-markets-9.7060965)
