Gold and silver fall sharply: record price drop in more than a decade
22 October 10:12
Precious metals prices suffered their biggest collapse in recent years. After the rapid growth, which many investors recognized as excessive, market participants began to actively sell their positions in gold and silver.
As reported by "Komersant Ukrainian" with reference to Bloomberg.
According to the media, the drop was the largest in the last 12 years.
Rapid decline in precious metals prices
The price of gold fell by 6.3% at once, dropping to $4,150 per ounce, the most significant one-day decline since 2013. Silver lost even more – 8.7% overnight.
Along with precious metals, shares of leading mining companies also fell: Barrick Mining, Newmont, and Agnico Eagle Mines opened trading on October 22 with a minus of more than 8%.
The sharp decline put an end to the months-long growth that had pushed gold and silver prices to historic highs just a week ago.
The rise in prices was previously attributed to expectations that the US Federal Reserve would cut interest rates by the end of the year, as well as growing distrust in government bonds and major currencies. Against this backdrop, investors moved to safe havens, primarily precious metals, seeing them as a hedge against the depreciation of the dollar and unbalanced US finances.
Undermining confidence in the dollar
Market uncertainty is being fueled by several global factors, including the record U.S. budget deficit, political turbulence, and disputes over central bank independence.
Investors are becoming increasingly concerned about U.S. economic policy, especially after the passage of the Republican tax and spending bill, which could balloon the country’s national debt to more than $40 trillion. This, coupled with the political risks of Donald Trump’s presidency, is forcing more and more players to look for alternatives to dollar assets.
New signals for the market
Expectations of a possible resumption of trade negotiations between the US and China put additional pressure on precious metals. The market viewed this news as a potential reduction in global risks, which reduced demand for gold and silver as hedges.
The situation was exacerbated by technical overbought metals and the strengthening of the US currency, which only accelerated the wave of sales.
As a reminder, gold on Thursday, October 16, updated its all-time high, remaining attractive to investors amid the Sino-US trade disputes and the US government shutdown.
