Gold and silver prices rebounded sharply yesterday after a steep selloff over the previous two sessions and the bullion was on track for its biggest daily rise since November 2008 as bargain-hunters stepped in amid resilient underlying fundamentals.
Spot gold rose 6.9 per cent to $4,985.44 per ounce, recovering from Monday’s low of $4,403.24 but still trading below last week’s record high of $5,594.82.
US gold futures for April delivery rose 7.7pc to $5,011 per ounce. Silver surged 11.7pc to $88.74 an ounce yesterday, after a record 27pc one-day decline on Friday and falling a further 6pc on Monday.
“I view the recent losses as corrective within the long-term uptrend,” said Peter Grant, vice-president and senior metals strategist at Zaner Metals. He added that many of the fundamentals that have driven gold higher over recent years remain firmly in place.
“At this point, we are likely to see a period of consolidation, with $4,400 an important support level on the downside and resistance probably around $5,100 on the upside,” Grant said. Precious metals retreated sharply over the past two sessions as Kevin Warsh was named the next head of the Federal Reserve, after Chair Jerome Powell steps down in May.
Investors expect Warsh to support rate cuts but tighten the Fed’s balance sheet. Additionally, the CME Group raised margin requirements on precious metal futures, which further weighed on prices. Despite the recent volatility, analysts broadly expect the bull market to continue, with the yellow metal likely to hit fresh peaks later this year.
“We expect prices to resume their longer term rise at a more sustainable pace as investors continue to be extremely concerned about economic and political conditions,” said CPM Group managing partner Jeffrey Christian.
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