Editor’s Note
This article reports on sharp declines in precious metals prices at the start of the trading week, attributed to market expectations of a more hawkish U.S. monetary policy following the designation of a new Federal Reserve chair.
The precious metals market started the new week as it ended the previous one: in a sharp retreat. Analysts link the phenomenon to Friday’s designation of a future chairman of the U.S. Federal Reserve (Fed), perceived as more favorable than his predecessor to a tightening of monetary policy in the world’s largest economy.
At 7:40 AM, the price of an ounce of gold was down 9.4% to $4,427.13, and the price of an ounce of silver was down 14.4% to $72.56. The price of the yellow metal had marked a historic high the previous week at $5,598.04 per ounce, while its white counterpart had set a record above $121 per ounce.
UBS, which recently raised its forecast for the gold price to $6,200 by summer, maintains this estimate despite an anticipated near-term consolidation between $4,500 and $4,800. With two further rate cuts expected this year, “Fed policy is not expected to change in the short term, which has historically marked the end of bull markets for gold.”
The bank’s experts are more skeptical regarding silver.
According to them, the key factor to watch will be Asia, particularly China, to assess whether prices can stabilize.
note analysts at Trading Economics.