and silver futures witnessed a sharp sell-off over the last two trading sessions.
Gold April futures plunged more than 16%, while March futures crashed by over 39% within just two days, creating panic among traders.
As highlighted in my January 29 article, the US dollar remains the real king of the global economy. Whenever the dollar strengthens, precious metals tend to move lower and the recent market action clearly confirms this trend.
At the beginning of the week, gold and silver showed extreme volatility, with daily gains of over 6% until Thursday. However, after the US market opened on Thursday, sentiment shifted sharply. From Thursday onward, precious metals reversed direction and continued to decline through Friday’s close, resulting in a massive two day correction.
The sharp fall on Friday was triggered after reports that former Federal Reserve Governor Kevin Warsh was nominated to replace Chair Jerome Powell. This development reduced concerns about the Federal Reserve’s independence, stabilized the US dollar, and pushed the higher. As expected, gold and silver moved in the opposite direction, extending their losses.
Now the key question for traders is:
Is this the beginning of a sustained downtrend in gold and silver, or merely a round of profit booking before prices rise again due to renewed US and Iran geopolitical tensions and fresh volatility?
