Gold prices were hammered on Saturday. Picture: Supplied <\/p>\n
Gold and silver prices plunged overnight after US President Donald Trump announced his nomination for the US Federal Reserve.<\/p>\n
In the latest market rout, more than $US15 trillion ($AU21 trillion) was wiped from the gold and silver price over 24 hours.<\/p>\n
This is half the size of the entire US economy.<\/p>\n
Spot silver prices fell by as much as 30 per cent to $US80.55 (AU$115.62) before recovering briefly throughout the US trading day.<\/p>\n
The plunge in silver prices was the biggest fall one day fall since March 20, 1980.<\/p>\n
Gold \/ US Dollar Spot. Gold and silver prices plunged Friday. Picture: CNBC
Silver \/ US Dollar Spot. Gold and silver prices plunged Friday. Picture: CNBC <\/p>\n
\u201cThis is getting crazy,\u201d Miller Tabak equity strategist Matt Maley told CNBC.<\/p>\n
\u201cMost of this is probably \u2018forced selling.\u2019<\/p>\n
\u201cThis has been the hottest asset for day traders and other short-term traders recently, so there has been some leverage built up in silver.<\/p>\n
\u201cWith the huge decline today, the margin calls went out.\u201d<\/p>\n
A margin call happens when an investor borrows money to buy an asset \u2013 in this case silver \u2013 and the price falls so much that the broker demands an immediate deposit of more cash or sell assets to cover the loan.<\/p>\n
Spot gold prices plunged around 11 per cent to $US4812 (AU$6906) an ounce.<\/p>\n
Capital.com senior market analyst Daniela Hathorn labelled Saturday morning\u2019s price drop as \u201coverdue\u201d following a strong run up.<\/p>\n
\u201cGold and silver had been trading in an increasingly speculative environment, with gold up nearly 20 per cent and silver more than 30 per cent over the past 10 days,\u201d she said.<\/p>\n
\u201cAgainst that backdrop, the near-10 per cent pullback in gold overnight, while sharp, looks consistent with a long-overdue correction after a period of uninterrupted upside.\u201d<\/p>\n
The price of gold is falling following a strong run for the commodity when it set two historic records throughout the week.<\/p>\n
The price of the precious metal rallied to a new record high briefly touching $US5602 (AU$7901), before sliding back to $US5,542 an ounce.<\/p>\n
Gold\u2019s rally continues to defy market expectations, having recently only passed the $US5000 ($AU7219) an ounce mark on Tuesday.<\/p>\n
Gold started 2025 worth $US2600 an ounce, but investors have piled into the safe haven asset over the past 13 months sending the price more than 90 per cent higher prior to Saturday\u2019s falls.<\/p>\n
US President Donald Trump announced the new Federal Reserve chair which started the precious metal sell-off. Picture: NewsWire\/ Joseph Olbrycht Palmer <\/p>\n
Why did the price of gold fall?<\/p>\n
The plunge was initially triggered after Mr Trump announced his nomination for the Federal Reserve chair Kevin Warsh to replace Jerome Powell.<\/p>\n
Markets continued to sell-off following the nomination, which experts called profit taking after the previous run higher.<\/p>\n
Ms Hathorn said the longer term fundamentals of the safe haven assets had not changed.<\/p>\n
\u201c(The precious metals) continue to benefit from central bank buying and their role as hedges against political and fiscal uncertainty,\u201d she said.<\/p>\n
\u201cRather, it reflects some concern that prices had moved too far, too fast, without a meaningful test of momentum.\u201d<\/p>\n
Also weighing on the commodities market was a strengthening US dollar which makes it more expensive for overseas buyers, including from Australia, to purchase the asset.<\/p>\n
Australia\u2019s dollar fell back below 70 US cents overnight.<\/p>\n
Investors had been snapping up the \u2018safe-haven\u2019 asset with experts saying the fall in gold is largely a correction to the price. <\/p>\n
Saturday\u2019s falls follow a near $6 trillion plunge on Friday on speculation Mr Trump was happy to see the world\u2019s reserve currency weaken, despite the potential risk it could lead to higher inflation.<\/p>\n
Gold declined more than five per cent and silver plunged more than eight per cent, while copper and nickel prices also fell, as traders reassessed the market.<\/p>\n
\u201cThe parabolic rally had to come to an end\u201d as commodity prices had \u201cgone up too far, too quickly\u201d, Kathleen Brooks, research director at XTB trading group, told AFP.<\/p>\n
Bitcoin prices have also been under pressure, falling below $US88,000 ($AU126,390).<\/p>\n","protected":false},"excerpt":{"rendered":"Gold prices were hammered on Saturday. Picture: Supplied Gold and silver prices plunged overnight after US President Donald…\n","protected":false},"author":2,"featured_media":441012,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[28,12,101,195329,207852,7291,13184,26548],"class_list":{"0":"post-441011","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-donald-trump","10":"tag-economy","11":"tag-gold-and-silver","12":"tag-gold-and-silver-prices","13":"tag-gold-prices","14":"tag-silver-price","15":"tag-us-federal-reserve"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/441011","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=441011"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/441011\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/441012"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=441011"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=441011"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=441011"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}