NEW YORK: Gold and silver prices rose sharply on Tuesday, with bullion set for its biggest daily rise since November 2008, as investors snapped up the metals following their steepest two-day slump in decades.
Spot gold climbed 5.3percent to USD4,913.59 an ounce by 1234 GMT. It is bouncing back from a low of USD4,403.24 on Monday, while the USD5,594.82 per ounce mark touched last week remains a historic peak for now. US gold futures for April delivery rose 6.1percent to USD4,936.20 per ounce. Silver surged 9percent to USD86.60 an ounce on Tuesday, after posting a record 27 percent one-day drop on Friday and falling a further 6percent on Monday.
“The market was oversold after the announcement of US President Donald Trump to nominate Kevin Warsh as the next Federal Reserve chairman. What we see today is a rebound,” said Quantitative Commodity Research analyst Peter Fertig. “You also see investors who have sold on profit taking are now regarding the prices as attractive again for buying.” While investors expect Warsh to favour rate cuts, they anticipate he will tighten the Fed’s balance sheet, a move typically supportive of the dollar.
Meanwhile, CME Group also raised margin requirements on precious metal futures, further weighing on prices. However, analysts see the yellow metal’s bull run continuing and expect it to notch fresh record highs later this year.
“Gold has now cleared its first retracement hurdle at USD4,858, shifting focus toward USD5,000 — the 50percent retracement of the latest slump. For silver, the equivalent levels sit higher at USD90.58 and USD96.52,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Meanwhile, the US Bureau of Labour Statistics said on Monday the closely watched employment report for January would not be released this Friday due to a partial shutdown of the federal government. In other metals, spot platinum climbed 5.4percent to USD2,235 per ounce after hitting a record high of USD2,918.80 on January 26, while palladium was up 4.8percent at USD1,801.50.
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