Editor’s Note
This article describes a sharp rebound in gold and silver prices following a significant drop, highlighting the volatility driven by Federal Reserve news and speculative activity in traditional safe-haven assets.
Gold and silver were rebounding on Tuesday after suffering a heavy fall the previous day, driven by a nomination at the U.S. Federal Reserve and unusual speculative movements on assets considered safe havens.
Just before 07:40, an ounce of gold was up 4.59% at $4,875.85, after having plunged the previous day to around $4,402. However, the yellow metal has moved significantly away from its all-time high of $5,598 reached on January 29.
Silver followed the same trend, accelerating by 7.77% to $85.38 per ounce, recovering after a fall to $71.76 on Monday. Last Thursday, this precious metal, also used in industry, had peaked at a record level of $121.65.
According to the investment manager at Cité Gestion, “It would be tempting to point to the nomination of Kevin Warsh (to head the Fed) as the main cause of the correction, but this reading is more of a shortcut than rigorous economic analysis. His profile, perceived as more orthodox and more attentive to monetary discipline, certainly served as a psychological catalyst.” But the markets “corrected because they were vulnerable, not because a man was appointed,” he insisted in a comment.
For Ms. Romar, “any small impulse could cause nervousness in the coming days,” including budget problems in the United States, tensions between Washington and Tehran, and labor market data on Friday.
The Swissquote expert is cautious, however, believing that “the recent behavior of gold is worrying.” Perceived as a safe-haven asset, the yellow metal usually serves as protection against market risks. But it is currently behaving more like a “risk asset, or even at times like a meme stock,” a security gaining popularity on social networks, warned Ms. Ozkardeskaya.