- Silver surged over 14% intraday, its biggest jump since 2008, but pared gains later
- Gold topped $5,000 an ounce, rising nearly 16% this year amid market fear and volatility
- The US dollar fell nearly 2% in six sessions amid concerns over Fed independence
Silver gave up most of its gains in late US trading after surging the most since 2008 and gold eased after topping $5,000 an ounce, with heightened volatility disrupting a rally that drove the metals to fresh record highs.
The white metal ended Monday with a 0.6% gain after earlier soaring more than 14% on to a record above $117 an ounce in its biggest intraday jump since the global financial crisis. Bullion, which jumped as much as 2.5% to $5,111.07 an ounce, also gave up some gains in late US trading as the greenback pared losses.
Silver's wild intraday price swings signaled that while it remains “in established uptrends, the balance of risk is shifting toward increased short-term volatility rather than a straight continuation higher,” said Gary Christie, head of North American research at Trading Central.
Photo Credit: Bloomberg
Meanwhile, gold's increase drove home its historic role as a measure of fear in markets. Fresh from its best annual performance since 1979, the metal is up nearly 16% this year due largely to the so-called debasement trade, whereby investors retreat from currencies and Treasuries. A massive selloff in the Japanese bond market last week is the latest example of investors rejecting heavy fiscal spending.
A gauge of the greenback has fallen nearly 2% in six sessions, with speculation the US may assist Japan to boost the yen adding to worries over Federal Reserve independence and Trump's erratic policy making.
In recent weeks, the Trump administration's actions — attacks on the Fed, threats to annex Greenland, military intervention in Venezuela — have spooked markets.
“Gold is the inverse of confidence,” said Max Belmont, a portfolio manager at First Eagle Investment Management, which holds billions of dollars in bullion. “It's a hedge against unexpected bouts of inflation, unanticipated drawdowns in the market, flare-ups in geopolitical risk.”
Swelling public debt in advanced economies has become another key pillar of gold's rally. Some long-term investors, convinced inflation will become the only path to state solvency, have piled into gold as a way to preserve purchasing power.
Silver's steep gain had Heraeus Precious Metals, one of the top global refiners, calling an end to the price rally, citing technical indicators including a historically low gold-silver ratio.
“While investors may have legitimate concerns about geopolitical risks, US monetary and fiscal policy, and the fate of the US dollar, history suggests that this rally is much nearer to its end than its beginning,” it said in a note.
Investors now are waiting for Trump's pick for the next Fed chair after the US president said he has finished interviewing candidates and reiterated he has someone in mind for the job. A more dovish chair would increase bets on further interest rate cuts this year — a positive for non-yielding bullion — after three successive reductions.
“What's going on right now is speculation that it could be that Rick Rieder with the Fed, so they would cut,” said Phil Streible, chief market strategist at Blue Line Futures, adding that traders are pricing in aggressive monetary easing by the Fed despite that it may happen later in the year.
The US central bank is widely expected to halt its interest-rate-cutting cycle this week, as a steadier jobs market restores a degree of consensus at the central bank after months of growing division.
Gold's appeal is also showing up in speculator positioning data, while options traders are bracing for more upside in a red-hot market where few wish to stand against the wave. The one-month risk reversal, a gauge of sentiment and positioning, spiked to the highest level since April 2024.
Gold rose 0.43% to close at $5,008.70 an ounce at 5 p.m. in New York. Silver advanced 0.6% to $103.78 an ounce. Platinum climbed to a record before giving up all the gains to trade 6.6% lower, while palladium was little changed. The Bloomberg Dollar Spot Index was down 0.4%.
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