Sharp pullback follows rapid surge in gold and silver
Gold prices fell below $5,300 per ounce on Thursday after briefly topping $5,600, signaling a pause in the powerful rally that has driven precious metals sharply higher this year. Silver also declined, sliding roughly 3% after recently trading above $120 per ounce.
The pullback comes after weeks of strong gains that stunned markets, with gold up around 20% year to date and silver posting a 42% rise. Analysts say the speed and scale of the rally left prices vulnerable to heightened volatility.
Stronger dollar and equity selloff weigh on metals
The retreat in precious metals coincided with a rebound in the US dollar, which climbed from its weakest level since early 2022. A firmer greenback typically pressures commodities priced in dollars, including gold and silver.
At the same time, equity markets sold off sharply. The Nasdaq Composite dropped more than 2%, led by a steep decline in Microsoft shares after the company’s earnings report raised concerns about higher capital spending and slowing cloud revenue growth.
Volatility risks rise after near-parabolic moves
Market strategists warned that the rapid ascent in metals prices may have entered a more unstable phase. Ole Hansen, head of commodity strategy at Saxo Bank, said the surge in gold and silver was becoming increasingly risky.
“Volatility is feeding on itself,” Hansen said, noting that as price swings intensify, market liquidity can thin quickly, amplifying moves in both directions.
Analysts remain bullish but caution on timing
Despite the pullback, longer-term sentiment among major banks remains constructive. Goldman Sachs recently set a year-end gold price target of $5,400, citing strong demand and increased participation from private investors, while also flagging upside risks.
The rally accelerated after the Federal Reserve held interest rates steady, with comments from Chair Jerome Powell doing little to halt the dollar’s earlier decline. According to Robin Brooks of the Brookings Institution, the move reflected strong conviction in a weaker dollar narrative that had fueled demand for hard assets.
Silver’s volatility has been even more pronounced. JPMorgan analysts said prices had already overshot forecast averages, adding that identifying a definitive peak is extremely difficult in markets showing near-parabolic momentum.
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