The price of silver collapsed 17%, gold 8%: the biggest sell-off in years

Gold and silver prices fell sharply in trading on Jan. 30, triggering a sell-off in stocks and funds linked to these metals.

- Gold, the cost of which the day before soared to almost $5600, on Friday fell in price by 8% to $4957 per troy ounce. The metal may end the day with the largest drop in more than a decade, notes the Financial Times.

- The spot price of silver collapsed 17%, approaching the $95 per ounce level.

- Other metals were also affected by the sharp pullback, with platinum falling in price by 16% and copper by 3%.

- Shares of Newmont, the world's largest gold producer, were down 7% on the U.S. premarket, while Barrick Mining shares were down 8% and Agnico Eagle Miners were down 7%.

The sell-off began amid the strengthening of the dollar after the news that Donald Trump is preparing to nominate Kevin Warsh as chairman of the Federal Reserve. Investors believe that the Fed under Worsh, who is considered a more orthodox economist than a number of other potential candidates, is likely to control inflation more tightly, the FT notes.

Fears of dollar depreciation over the past year were one of the key arguments in support of gold growth, the publication continues. Now the growth of the U.S. currency has undermined investor sentiment, which previously actively invested in metals after Trump's signals about the willingness to allow the dollar to weaken. The main demand came from Chinese investors: purchases were so large that the Shanghai Futures Exchange urgently introduced measures to cool the frenzy in the markets of precious and industrial metals, notes Bloomberg.

Gold buyers appear to have "capitulated", Charles-Henri Monchot, chief investment officer at Swiss bank Syz, told the FT. He said the spike in volatility indicates that the market is overbought in the short term, requiring investors to be more cautious.

Gold's performance "confirms the cautionary tale of rapid rise and equally rapid fall," Oversea-Chinese Banking Corp. strategist Christopher Wong told Bloomberg. The market correction is long overdue, he said, and reports of Warsh's nomination were the trigger. "This looks like one of those occasions that markets are waiting for to start reversing parabolic moves," the strategist stated.

This article was AI-translated and verified by a human editor