After hitting record highs, Gold, Silver, and Copper’s charts have fallen sharply on Friday, producing a mass of jaded buyers. These investors have locked in substantial profits as expectations of large US rate cuts this year partly diminish and the dollar stabilizes.
Today, President Donald Trump announced that he has chosen Kevin Warsh, the former Federal Reserve Governor, as the head of the Federal Reserve. Resultantly, the dollar index(DXY) opens a new tab against potential competitors with impending pricing measures based on expectations of Warsh’s selection.
Panmure Liberum, an analyst Tom Price stated that all market analysts have agreed on the rationality of the Kevin Warsh that he would not push aggressively for rate cuts. The generalist investor with varying agendas, including protecting capitals are gaining profits. A US currency makes dollar-priced metals more expensive for holders of other currencies, hitting the demand.
This association is employed by funds that trade through buy and sell signals from numerical models. Both Gold and Silver prices have increased by 17% and 39% respectively in the month. The profit taking on the previous trading session came after multiple days of thin liquidity, where small flows powered by the fears of missing out on huge moves.
According to Ole Hansen, head of commodity strategy at Saxo Bank, “both gold and silver were due for a correction because of how speculative and unruly this last run-up has been.” As of 12:01 GMT, gold was at $5143.40 an ounce, which was down 4.7%, and silver was at $103.40, which was down 11%, both of which hit record highs of $5594.80 and $121.60 on Thursday, respectively.
Independent analyst Ross Norman quoted “precious metals have found gravity” and referred to the recent sell-off as “brutal”; he continued, “but it’s a reminder to speculators that these two markets are two-way markets.” So far in January, copper prices have increased approximately 6% after an 11% rise in December 2023, down 1.1% from the record high of $14527.50 per metric ton on Thursday.
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According to Macquarie analyst Alice Fox, “price levels will likely remain elevated and volatile; therefore, as funds continue flowing into a relatively small market that is now extremely crowded, the risk increases.”
Traders further expect that before the Lunar New Year holiday on February 16th, when China’s demand for metals will cease for a week, and its position in volatile markets will disappear, losses will deteriorate for copper, aluminum, and other industrial metals that are listed. “No rational Chinese person will want to own positions in these wildly movable markets,” Panmure’s Price stated. “Just look at what’s taken place over a 12-hour time frame.”
