Wild fluctuations swept through the financial markets overnight before calming down as Wall Street commenced trading on Monday. U.S. stocks are holding steady following gains in Europe and sharp declines in Asia, while gold and silver prices rebounded from earlier significant losses.
The focal point of market activity was once again on precious metals, where momentum abruptly halted after gold’s price nearly doubled in a year. Gold briefly dipped below $4,500 US per ounce overnight, marking a drop of over $1,000 from its recent peak reached just last week. It later recovered much of the loss and settled at $4,725.00, a 0.5% decrease from Friday.
Silver experienced an even more tumultuous journey, swinging from a nine percent loss overnight to a three percent gain. Investors had been flocking to gold and silver as safer asset options amid various concerns, including potential Fed policy changes, lofty stock market valuations, tariff threats, and global government debt burdens.
Prices for both metals plummeted on Friday, with silver witnessing a 31.4% decline. Some analysts attributed this to President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve chair. Warsh’s background as a former Fed governor led some investors to anticipate higher interest rates to combat inflation, potentially reducing the appeal for gold and silver as safe-haven assets.
However, skepticism looms on Wall Street regarding this interpretation, with many speculating that Trump expects Warsh to lower interest rates, a move he has been advocating for. The Fed chair’s decisions significantly impact the global economy and markets by influencing interest rates, job market stability, and inflation control.
Recent drops in gold and silver prices are believed to be more of a correction for traders who had leveraged bets on further price surges, rather than a fundamental shift in demand expectations for metals. Darrell Cronk, Chief Investment Officer at Wells Fargo Wealth & Investment Management, shared this perspective.
As trading commenced, the S&P 500 slightly declined by 0.1%, heading for a fourth consecutive loss. The Dow Jones Industrial Average rose by 111 points, or 0.2%, by 9:35 a.m. ET, while the Nasdaq composite dipped by 0.3%. Technology stocks, particularly Nvidia, faced selling pressure, with the chipmaker experiencing a 2.2% decline. In Asia, AI-related stocks tumbled, with South Korea’s Kospi plunging 5.3% for its worst day in nearly 10 months after SK Hynix, a chip company, dropped by almost nine percent.