Gold experienced a notable resurgence, rising for the second consecutive day and surpassing the $5,000 per ounce mark as buyers capitalized on its recent price dip. Early trading saw bullion increase by as much as 2.1%, building on a more than 6% gain from the previous session. This rally occurred as a renewed risk-on sentiment permeated the markets, alongside a weakening US dollar. Despite closing on Tuesday approximately 12% below its all-time high reached on January 29, gold still notably remained up nearly 15% year-to-date. Silver also recorded gains during this period.
Daniel Ghali, a senior commodity strategist at TD Securities, remarked in a recent note that “forced sales have likely run their course in precious metals.” He cautioned, however, that the heightened volatility over the prior week could deter retail participants— an increasingly vital segment of the market.
Precious metals had surged in recent weeks, driven by speculative momentum, geopolitical tensions, and concerns regarding the Federal Reserve’s independence. Yet, analysts had previously warned that such rapid advances might be unsustainable. A significant downturn occurred at the end of last week, marked by silver’s most substantial daily decline on record and gold experiencing its steepest drop since 2013.
Large positions had been accumulated by both Chinese funds and Western retail investors, with additional momentum gained from investments in leveraged exchange-traded products and a wave of call-options buying. A sharp market correction began during Asian trading hours on Friday and continued into early this week.
Volatility in the precious metals sector is expected to remain high, according to analysts at Bank of America Corp., which also highlighted that gold possesses a stronger long-term investment thesis compared to silver. Niklas Westermark, head of EMEA commodities trading at BofA, suggested that while inflated prices and market turbulence may influence investors’ position sizes, overall interest in gold is likely to stay robust.
Several financial institutions, including Deutsche Bank AG, have expressed confidence in gold’s recovery, with predictions suggesting the precious metal could rise to $6,000 an ounce. As of 9:12 a.m. in Singapore, gold was priced at $5,048.55 per ounce, while silver was up to $86.90. Platinum and palladium also saw gains during this trading session. The Bloomberg Dollar Spot Index, which measures the performance of the US dollar, was up 0.1% after closing 0.3% lower the previous day.
