After a volatile week for precious metals markets, bargain hunting returned, pushing gold prices above $5,000 an ounce. The price of gold rose as much as 1.7% on Monday, further recovering some of its losses after suffering a historic plunge at the end of last month. It has now recouped about half of the decline that occurred after hitting a record high on January 29. Silver prices were also higher.
Ahmad Assiri, analyst at Pepperstone Group, said that whether gold can hold the $5,000 mark "will be the key to judging whether the market rebound is a short-term passive rebound or whether it can lead to a more sustainable rise."
Precious metal prices have set new records all the way, driven by factors such as intensifying geopolitical risks, rising trade in currency depreciation and concerns about the independence of the Federal Reserve. A wave of speculative buying further added fuel to the rally, until gold and silver prices plunged late last month. U.S. Treasury Secretary Scott Bessent blamed last week's violent fluctuations in gold prices in part on "disorderly" trading behavior in the Chinese market.
Although the market has been trading in shock for a week after a historic correction, many banks and asset management institutions, including Deutsche Bank, Goldman Sachs Group, and Pictet Asset Management, are still optimistic about gold's rebound and believe that its long-term demand drivers still exist, such as the accelerated reduction of U.S. dollar assets globally, policy uncertainty, and the continued increase of gold holdings by central banks.
According to people familiar with the matter, Chinese regulatory authorities have recommended that financial institutions control their U.S. debt holdings, citing concerns about the risks of concentrated positions and market volatility. Relevant officials urged banks to limit purchases of U.S. debt and asked institutions with high holdings to reduce their positions.
The silver market is more volatile than gold, and the momentum effect of speculative funds amplifies market fluctuations. Silver has plummeted by more than a third since hitting its historical peak; on Monday it rose as much as 6%, rising back above $82 an ounce.
Looking ahead, traders will focus on upcoming U.S. economic data to explore the direction of the Federal Reserve's policy. The January jobs report due on Wednesday is expected to show signs of a stabilizing labor market, while inflation data is due on Friday.
In addition, concerns about the independence of the Federal Reserve have further intensified: Kevin Warsh, nominated by US President Donald Trump to be the next chairman of the Federal Reserve, publicly supports a new policy agreement between the Federal Reserve and the Treasury Department.
As of 11:15 a.m. London time, gold was up 0.6% at $4,992.66 an ounce; silver was up 1.9% at $79.28 an ounce. Platinum and palladium prices fell. The Bloomberg Dollar Spot Index, which measures the greenback, fell 0.2%.