Wild price fluctuations in financial markets settled down as trading began on Wall Street on Monday. U.S. stocks remained relatively stable after increases in Europe and significant drops in Asia, while gold and silver prices bounced back from earlier sharp declines.
The main focus in financial markets continued to be on precious metals, where the momentum abruptly paused after gold’s value surged by almost 100% in the past year.
Overnight, gold briefly fell below $4,500 per ounce, marking a decline of over $1,000 from its recent peak. However, it managed to recover most of those losses and settled at $4,725, reflecting a 0.5% decrease from Friday’s levels.
Silver’s price experienced even more volatility, swinging from a nine percent loss to a three percent gain within a short period.
Investors had been flocking to gold and silver as safe-haven assets amidst various concerns, such as a potentially less independent Federal Reserve, an overpriced U.S. stock market, tariff threats, and high government debts globally.
The precious metals market saw a sharp downturn on Friday, with silver plunging by 31.4%. Some analysts attributed this drop to President Donald Trump’s nomination of Kevin Warsh as the next Fed chair, as his past tenure at the Federal Reserve fueled expectations of higher interest rates to combat inflation, which could diminish the appeal of gold and silver as protective assets.
Nevertheless, there are mixed opinions on this interpretation, with some speculating that Trump’s preference might lean towards rate cuts, aligning with his previous demands.
The Federal Reserve chair’s decisions significantly impact the global economy and markets by influencing interest rate movements, which, in turn, affect various investment prices while balancing job market stability and inflation control.
The recent declines in gold and silver prices are likely more attributable to traders unwinding leveraged positions betting on further price escalations rather than a fundamental shift in the demand outlook for metals, according to Darrell Cronk, the chief investment officer at Wells Fargo Wealth & Investment Management.
As trading commenced, the S&P 500 inched down by 0.1%, aiming for its fourth consecutive loss. Meanwhile, the Dow Jones Industrial Average rose by 0.2%, or 111 points, as of 9:35 a.m. ET, while the Nasdaq composite dipped by 0.3%.
Major tech stocks, including Nvidia, faced selling pressure, with a 2.2% decline, given their pivotal role in the artificial intelligence sector. The tech sell-off was more pronounced in Asia, with AI leaders witnessing substantial drops. South Korea’s Kospi index plunged by 5.3%, marking its worst performance in almost ten months, following an almost nine percent decline in chipmaker SK Hynix’s shares.
