Market Review:
1.
Spot gold hit a record high of $4,381 early this morning Beijing time, then continued its decline. The plunge accelerated during the US trading session, plummeting 6% intraday, its biggest drop since more than 2013, to a low of $4,082. New York gold futures fell below $4,100/oz, down over 6% on the day.
2.
Spot silver accelerated its decline in early European trading, dropping over 6% on the day before pausing. Its decline resumed during the US trading session, plummeting 8.7% at one point, its biggest drop since 2021, to below $48. New York silver futures plummeted 8%, to a low of $47.12/oz.
Analyst Views:
1. Kitco Metals Senior Analyst Jim Wyckoff: Market risk appetite improved at the start of this week, negative for safe-haven precious metals.
2. WisdomTree Commodity Strategist Nitesh Shah: Gold prices still have room to rise, but the current rally is overly aggressive, and every new high is inevitably followed by a technical correction. 3. Nicky Shiels, Head of Metals Strategy at MKS PAMP SA: "The market is showing signs of a bubble, primarily driven by extreme overbought conditions—the rally is peaking. A $1,000 surge in six weeks suggests gold prices are overvalued and we are at irrationally high levels."
4. Tai Wong, an independent metals trader, said: "Silver's sharp drop today dragged down the entire precious metals sector." While there was still buying during yesterday's dip in gold prices, the sharp surge in high volatility over the past week sent a warning signal, potentially triggering profit-taking, at least in the short term.
5. Ole Hansen, Commodity Strategist at Saxo Bank: "In recent trading days, more and more traders have become wary of the risk of a correction. Markets are demonstrating their true strength during corrections, and this time is no exception. Underlying buying may limit the decline."
6. Kathleen Brooks, Director of Research at XTB: "There is no clear catalyst for this sharp drop in gold and silver prices. Overvaluation coupled with signals that US CPI data may be worse than expected triggered the sell-off. A correction is not necessarily a bad thing." Despite the larger-than-expected decline, the fundamentals driving gold and silver prices remain solid.
7. Sim Moh Siong, FX Strategist at Bank of Singapore: "The recent rise in gold prices may have been a bit too much, too fast. However, concerns about G10 fiscal sustainability and central bank independence will persist until 2026, making it difficult to predict whether gold will peak soon."
8. Tim Waterer, Chief Market Analyst at KCM Trade: "Profit-taking and weakening safe-haven inflows have combined to mitigate gold's strength today. Any pullback in gold would be seen as a buying opportunity, as the Federal Reserve remains on track to cut interest rates."
