Gold surged over 5 per cent on Tuesday, marking its biggest daily gain since November 2008. Following a dramatic two-day drop, the precious metals market experienced a significant rebound, with analysts predicting a continued bull run and potential record highs later this year.
Gold and Silver Rally
Spot gold climbed 5.8 per cent to $4,935.56 an ounce by 0818 GMT, recovering from a low of $4,403.24 on Monday, which came just after it peaked at $5,594.82. U.S. gold futures for April delivery rose 6.6 per cent to $4,958.50 per ounce.
Market Dynamics and Analyst Insights
Kyle Rodda, a senior market analyst at Capital.com, highlighted the recent price movements, stating, “It’s a reasonable call that this is somewhere around fair value potentially, if you consider that we saw a market behaving fairly irrationally for a few weeks there.” He noted that current prices reflect a return to levels seen in early January.
Silver’s Impressive Recovery
Silver also made notable gains, jumping 10 per cent to $87.40 an ounce on Tuesday. This comes after a staggering 27 per cent drop last Friday, which marked its biggest one-day loss on record. The metal had fallen by an additional 6 per cent on Monday.
Impact of Political Developments
The decline in precious metals was attributed to U.S. President Donald Trump’s nomination of Kevin Warsh as the next chair of the U.S. Federal Reserve. Rodda explained, “The markets endorsed Warsh’s nomination by U.S. President Donald Trump as someone relatively credible, and so we saw the dollar move on that basis, and again, that was kind of like the pin that popped the big precious metals.”
Margin Requirements and Market Reactions
Compounding the pressure on precious metals, the CME Group raised margin requirements on futures contracts, which contributed to last week’s sharp decline in prices. The U.S. Bureau of Labor Statistics also announced that the employment report for January would not be released as scheduled due to a partial federal government shutdown.
Other Precious Metals on the Rise
In addition to gold and silver, other precious metals also saw gains. Spot platinum rose 5.7 per cent to $2,242.55 per ounce, recovering from a record high of $2,918.80 on January 26. Palladium increased by 5.3 per cent, reaching $1,811.39.
