Gold and silver extended their sell-off on Monday, deepening losses from last Friday, as a stronger dollar and profit-taking sapped the momentum from gains that had driven precious metals to record highs just days earlier.
Spot gold lost about 6% to $4,538 an ounce, after falling nearly 10% on Friday, when prices fell below $5,000 an ounce.
Silver, which rose alongside gold on safe-haven demand and speculative inflows, also remained under pressure after last Friday, when the metal posted its worst day since March 1980.
Spot prices for the white metal fell more than 12% to $74.36 an ounce as of 12:52 a.m. ET.
According to analysts, the drop followed a sharp reversal on Friday, when optimism about a U.S. interest rate cut collided with a sudden reassessment of the leadership of the Federal Reserve after President Donald Trump nominated former Fed Governor Kevin Warsh to succeed Chairman Jerome Powell when his term ends in May.
“The ‘Buy America’ trade has returned as a result, and the independence push that drove gold and silver to record highs just below $5,600 and $122 an ounce early Thursday morning is unraveling,” José Torres, senior economist at Interactive Brokers, said in a note on Monday, SEEbiz reports.
Christopher Forbes, head of Asia and the Middle East at CMC Markets, said gold’s sharp pullback reflected a classic correction after an extraordinary rally, rather than a breakdown in the long-term bullish thesis.
Gold’s pullback is “a classic air pocket after an extraordinary run,” Forbes said. “Profit-taking, a stronger dollar and new geopolitical headlines from Washington eased overcrowded trading.”
The dollar index, which measures the dollar’s strength against a basket of currencies, has gained about 0.8% since Thursday.
A stronger dollar makes dollar-priced gold less attractive to foreign buyers, while higher rates increase the opportunity cost of holding the non-interest-bearing yellow metal, making government bonds more attractive as a safe haven.
