【South Korea】Gold Price Falls Below $5,000 During Lunar New Year Holiday, Silver Plummets Over 10%; Related Stocks Also Decline

During the Lunar New Year holiday period, global precious metal prices continued their downward trend. The price of gold, which had staged a short-term rebound, fell again below $5,000 per ounce, intensifying the battle over its future direction.
According to Investing.com, the international spot gold price closed at $4,877.4 per troy ounce on the 17th (local time). This represents a decline of approximately 2.8% over the past week. Having recovered to the $5,100 level earlier in the week and raising hopes for a rebound, gold failed to hold above $5,000 and turned weak again.

The decline in silver prices was even more pronounced. The spot silver price plunged nearly 10% to $73.48 per ounce on the same day. Silver, which has a higher proportion of industrial demand than gold, appears to be reacting more sensitively to economic and dollar trends, with its volatility expanding.

Recently, gold prices rebounded temporarily after U.S. Consumer Price Index (CPI) data came in below expectations, boosting expectations for Federal Reserve (Fed) interest rate cuts. Lower borrowing costs are favorable for non-yielding precious metals. However, it is analyzed that the current firm trend of the Dollar Index (DXY) in the 97 range is constraining gold’s rise. Gold typically exhibits an inverse correlation with the dollar.
The closure of major Asian financial markets, including not only South Korea but also China, Hong Kong, and Singapore, for the Lunar New Year holiday, coupled with the weekend closure of the U.S. market, is also seen as having significantly increased downward pressure by reducing liquidity. Scudeng Financial, a global precious and non-ferrous metals trading specialist, recently pointed out, “In a situation where liquidity has decreased across the metal market,” and stated, “Unless speculative demand clearly re-enters, prices are likely to move within a limited range in the short term.”
The market views the ability to recover the $5,000 level as a key watershed that will determine the short-term direction.

The decline in precious metal prices also weighed on related stocks. Since the 11th of this month, over the past week, Newmont fell about 2%, turning weak. Gold.com (down 6.6%) and Core Mining (down 5.5%) plummeted.
As fluctuations in raw material prices directly impact earnings, mining stocks tend to exhibit a leveraged effect in response to changes in precious metal prices.

Previously, on the 30th of last month, expectations for accommodative monetary policy were dampened when former Fed Governor Kevin Warsh, known as a “hawk,” was named as a candidate for the next Fed chair, leading to a dollar rally. Subsequently, profit-taking selling flooded the precious metals market. Compounded by a margin call shock, gold and silver prices recorded their largest declines since 1980.
There is a prospect that U.S. employment indicators and major countries’ inflation indicators to be released this week are likely to influence short-term volatility.