After record highs: Gold and silver experience heavy losses

The price for one Troy ounce of gold (around 31.1 grams) fell by ten percent to $4,852.94 in the evening, after rising to around $5,450 in early trading. Since the start of the year, the price of gold is currently up around twelve percent.

At the Silver price At the end of the week there was a considerable decline of almost 25 percent to $87.76. However, it still had a strong performance of a good 20 percent in January. On Thursday, silver hit a record high of $121.65.

In addition to the profit-taking, the uncertainty about the future monetary policy of the US Federal Reserve. US President Donald Trump has the former Fed governor Kevin Warsh as the successor to the head of the US Federal Reserve Jerome Powell suggested. This has raised doubts in the markets that there will actually be a significant easing of monetary policy. Expectations of interest rate cuts had recently supported precious metal prices.

Warsh has long been considered a monetary policy hawk and has tended to advocate for higher interest rates. Recently, however, he also criticized the high interest rates. Instead, he calls for a further reduction in the central bank’s bond holdings. This could deprive the financial markets of liquidity and also weigh on precious metal prices.

Commerzbank expert Thu Lan Nguyen warns against inferring too much from the nomination:

“The US President has made it sufficiently clear that he wants to see significantly lower interest rates. He is unlikely to abandon this quickly.”

It is expected that the Fed will also react to this pressure.

“This suggests that the price of gold is fundamentally well supported “The magnitude of the correction also suggests that market participants were just waiting for an opportunity to take profits after the rapid price increase.”

Precious metal prices have also recently been supported by rising prices geopolitical risks. So did US Secretary of State Marco Rubio threatened Iran with a military preemptive strike if the leadership in Tehran planned attacks on US facilities. This is fueling concerns in the financial markets that geopolitical risks are spreading to the entire Persian Gulf region.

Iran’s foreign minister Abbas Araghtschi has said his country is ready for both negotiations and war amid tensions with the United States.

Many investors consider precious metals – especially gold – to be safe havens in times of crisis. Silver is also an important industrial metal required for many applications related to AI, robotics and energy.