The US dollar strengthened to its highest level in nearly two weeks on Thursday, pressuring gold and silver prices. A stronger dollar makes metals priced in dollars costlier for buyers using other currencies, limiting global demand.
Tim Waterer, chief trade analyst at KCM, said, “The dollar received a new lease of life with the Warsh nomination, and the currency has been able to keep making forward progress. Traders are more circumspect now on gold in light of recent extreme volatility.”
Investors are reassessing the market outlook following Kevin Warsh’s nomination as Federal Reserve chair. Warsh’s preference for a smaller Fed balance sheet and a less aggressive approach to rate cuts has strengthened expectations that US interest rate reductions may slow, bolstering the dollar while putting pressure on non-yielding assets like gold and silver.
Gold continues to struggle as the stronger dollar and cautious sentiment limit upside. Analysts note that with slower rate cuts expected, gold’s appeal as a safe-haven asset is muted.
Silver has experienced heightened volatility. International prices plunged over 10% to trade below $65 per ounce, marking a six-week low, before recovering around 3%. Despite the rebound, silver ended the week down nearly 16%, following an 18% drop the previous week, the largest weekly decline since 2011.
Market watchers say precious metals will remain sensitive to the dollar’s movements and upcoming Fed guidance, making the next few weeks crucial for gold and silver trends.