Profit-Taking Hits Gold and Silver After Surge
Silver and gold prices fell sharply on Monday after hitting record highs in the previous few sessions. Silver fell more than 9% in its biggest intraday drop since 2021, after previously breaking through $80 an ounce for the first time. Speculative demand from China that fueled the surge in silver prices is now starting to subside, with technical indicators suggesting the price rally was too fast and too high.
Meanwhile, gold also suffered its biggest drop in two months, falling 4.5% to below $4,329 an ounce. This sharp reversal came after gold prices hit a record high last week, but the market is showing signs of overbought conditions, with buying momentum having surpassed the 70 level on the Relative Strength Index (RSI), an indication of overbought markets.
The premium for silver in Shanghai rose more than $8 an ounce over the London price, the largest gap ever recorded. However, silver prices subsequently fell to $71.96 an ounce, dampening hopes for a continuation of the metal's strong rally. Meanwhile, platinum also plunged more than 13% and palladium plunged more than 15% in its biggest decline since 2022. This decline impacted the industrial sector, particularly those requiring silver for solar cells, with the risk of a supply shortage becoming increasingly apparent.
Furthermore, traders are increasingly concerned about the potential for significant losses if the silver bull market reverses, given near-depleted inventories and increasing volatility. CME Group also announced margin increases for silver futures contracts on the Comex, a move to reduce speculation and stabilize market prices. The silver market now faces new challenges as a US investigation could lead to trade restrictions or tariffs that disrupt global silver supplies.
Overall, despite short-term declines in gold and silver prices, geopolitical factors and economic uncertainty remain long-term supporting factors, potentially leading both precious metals to return to higher levels.
Source: Newsmaker.id
