Wild fluctuations in the financial markets settled as trading began on Wall Street on Monday. U.S. stocks remained stable after seeing gains in Europe and significant declines in Asia. Gold and silver prices rebounded after earlier steep losses.
The focal point in the financial markets was once again precious metals, where momentum abruptly paused following a significant surge in gold prices over the past year. Gold briefly dipped below $4,500 US per ounce overnight, marking a decrease of over $1,000 from its recent peak. It later recovered some of the losses, settling at $4,725.00, down 0.5% from Friday’s closing price.
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 safer assets amidst various concerns, such as potential Fed policy changes, high stock market valuations, trade tensions, and global debt burdens.
Gold and silver prices plummeted on Friday, with silver dropping by 31.4%. Some attributed this decline to President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve chair, speculating that Warsh might maintain high interest rates to combat inflation, reducing the appeal of precious metals as a safe haven.
However, conflicting views emerged on Wall Street, with some suggesting that Trump’s expectation is for Warsh to lower interest rates, aligning with the president’s stance. The Fed chair’s decisions significantly impact the global economy and financial markets by influencing interest rates, which in turn affect various investment asset prices.
Recent fluctuations in gold and silver prices are likely due to traders unwinding leveraged positions rather than a fundamental shift in demand for metals, according to Darrell Cronk, chief investment officer at Wells Fargo. As trading commenced, the S&P 500 inched down by 0.1%, while the Dow Jones Industrial Average rose by 0.2%. The Nasdaq composite declined by 0.3%, with tech stocks like Nvidia facing selling pressure.
In Asia, technology stocks faced significant losses, with South Korea’s Kospi plunging by 5.3% amid a broader sell-off in AI-related companies. Chipmaker SK Hynix recorded a nearly nine percent decline, marking one of the index’s worst trading days in almost ten months.
