The prices of Gold and Silver have sunk in the last two months, with prices crashing for continuous days due to several factors. Gold sank for the sixth time in the past seven trading days, losing 5.9%, or $289.20 an ounce, on Thursday. Silver futures shed 8.2% a troy ounce, bringing the total decline from a seven-session fall to around 20%. On Friday, Silver crashed another 5% to under $70.
Gold and silver aren’t the only metals selling off, either. Platinum and palladium, less-traded precious metals, have lost 17% and 15%, respectively, this month. The industrial metals copper and aluminum have also turned lower.
Precious metals are usually considered a haven, offering investors safety during times of war, inflation, or other market mishaps. Gold closed at a record $5,318.40 a troy ounce in late January. However, that price has now tanked over 13%. Investors aren’t too puzzled as to what is hitting the precious metals market this hard. However, there are several catalysts for the fall-off.
Why are Gold and Silver Prices Down?
One big reason for both Gold and Silver prices falling has been the continued battle against inflation. Hopes of interest rate cuts, which helped spur metals higher late last year, are beginning to dwindle. Central banks in the U.S. and Europe this week signaled that rates might not fall as quickly as investors had expected. War in the Middle East and the resulting energy shock have clouded their outlooks for inflation and economic growth.
In addition, the precious metal ETF market has expectedly cooled after a string of months of being a hot commodity. After investing millions into gold exchange-traded funds over the past year, individual investors have begun to slow down the buying spree. Thursday marked the sixth straight day that they sold SPDR Gold Shares, the largest gold ETF, according to data from VandaTrack. Over that period, they have sold about $10.5 million of the ETF on a net basis, based on data through midday trading Thursday. That is a relatively small figure compared with buying last year, which reached as much as $36.8 million in one day.
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Once inflation finally begins to subside and the ongoing war between the US, Israel, and Iran ends, perhaps the precious metals market could return to the highs it saw near the beginning of this year.