Gold and silver prices dropped steeply on Monday as the recent record-breaking rally in precious metals showed clear signs of cooling, while global equity markets also headed lower.
Gold prices slid 7.8% to around $4,515 per troy ounce, while silver saw an even sharper decline, falling 14.4% to about $73. The sell-off followed growing investor caution and a shift in expectations around US monetary policy.
Why gold and silver are falling
The downturn accelerated after reports that Kevin Warsh is set to be nominated as the next chair of the Federal Reserve. Warsh is widely seen as a more traditional and policy-orthodox economist, a view that unsettled investors who had piled into precious metals during the rally.
Market participants said speculative positioning had grown excessive in recent weeks. According to Raymond Cheng, chief investment officer for North Asia at Standard Chartered, heavy speculation helped fuel the surge—and just as quickly triggered the reversal once sentiment changed.
Global markets react
The decline in precious metals came alongside broad weakness in global stock markets:
- South Korea’s Kospi index dropped 4.6%, leading losses across Asia
- US equity futures fell, with S&P 500 futures down about 1% and Nasdaq 100 futures lower by 1.4%
- Futures tracking Europe’s Stoxx Europe 600 slipped 0.8%
Meanwhile, the US dollar strengthened slightly, rising 0.1% against a basket of major currencies. Yields on 10-year US Treasuries edged lower to 4.22%, reflecting higher bond prices amid risk-off sentiment.
What drove the earlier rally?
The strong run-up in gold prices earlier this year was supported by multiple factors:
- Increased central bank buying, particularly after Russia’s foreign exchange reserves were frozen in 2022
- Growing demand from exchange-traded funds (ETFs) and physical bullion investors
- Gold’s role as a hedge against expansionary fiscal policies and ongoing geopolitical uncertainty
Despite the recent pullback, some analysts still see long-term support for bullion. Cheng said prices near $4,650 could present a buying opportunity, noting that uncertainty around US fiscal policy remains elevated.
Mining stocks also slide
Gold mining shares mirrored the broader sell-off. Australian-listed Newmont Corporation fell roughly 10%, while Zijin Gold International dropped about 5.6%, highlighting pressure across the sector.
