New York:
Silver and gold pulled back in late US trading on Monday after a dramatic surge that pushed both metals to record highs, underscoring rising volatility in global financial markets.
Silver, which had earlier jumped more than 14% in its biggest intraday rally since the 2008 financial crisis, ended the session with a modest 0.6% gain, after touching a record high above $117 an ounce. Gold also pared gains after climbing as much as 2.5% to an all-time high of $5,111.07 an ounce, easing as the US dollar recovered some ground.
According to market analysts, silver’s sharp intraday swings indicate that while the broader trend remains bullish, near-term risks are increasing.
“Silver remains in established uptrends, but 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.
Gold’s surge reflects market fear and currency concerns
Gold’s rally reinforces its long-standing reputation as a hedge against uncertainty. Fresh off its best annual performance since 1979, bullion is now up nearly 16% this year, driven largely by the so-called debasement trade, as investors retreat from fiat currencies and government bonds.
A sharp selloff in Japanese government bonds last week highlighted mounting concerns over excessive fiscal spending and rising debt in advanced economies. Meanwhile, the US dollar has fallen nearly 2% over the past six sessions, with speculation that Washington may intervene to support the yen adding to anxiety over Federal Reserve independence.
Markets have also been rattled by recent actions and rhetoric from the Trump administration, including criticism of the Fed, geopolitical posturing over Greenland, and threats of military intervention in Venezuela.
“Gold is the inverse of confidence,” said Max Belmont, portfolio manager at First Eagle Investment Management.
“It’s a hedge against unexpected inflation, market drawdowns, and flare-ups in geopolitical risk.”
Debt fears fuel long-term demand
Rising public debt in developed economies has become a major driver of long-term gold demand. Some investors believe inflation may ultimately be used to manage sovereign debt burdens, prompting increased allocations to bullion as a store of value.
However, not everyone is convinced the silver rally has room to run. Heraeus Precious Metals, one of the world’s largest refiners, warned that technical indicators—such as a historically low gold-silver ratio—suggest the rally may be nearing its peak.
“History suggests that this rally is much nearer to its end than its beginning,” the firm said, despite acknowledging legitimate concerns around geopolitics, US fiscal policy and the dollar.
Fed leadership speculation adds fuel
Investor attention is now focused on Donald Trump’s choice for the next Federal Reserve chair, after the president said he has completed interviews and has a candidate in mind. Markets are betting that a more dovish appointment could lead to further interest-rate cuts—traditionally supportive of non-yielding assets like gold.
“Traders are pricing in aggressive monetary easing by the Fed,” said Phil Streible, chief market strategist at Blue Line Futures, noting speculation around Rick Rieder as a possible pick.
Despite these expectations, the Fed is widely anticipated to pause its rate-cutting cycle this week, supported by a relatively resilient US jobs market.
Strong speculative positioning
Gold’s appeal is also evident in derivatives markets. Speculative positioning remains elevated, while options traders are bracing for further upside. The one-month risk reversal, a key sentiment gauge, has surged to its highest level since April 2024.
Market snapshot
- Gold: Up 0.43% to $5,008.70/oz
- Silver: Up 0.6% to $103.78/oz
- Platinum: Hit a record earlier, then fell 6.6%
- Palladium: Little changed
- Bloomberg Dollar Spot Index: Down 0.4%