Gold and Silver Extend Declines Amid Dollar Strengths

Gold and silver prices continued their retreat today, extending Friday's dramatic selloff and raising questions about whether precious metals have entered a correction within a broader bull market or if the rally has reached its peak.

The precious metals experienced extraordinary volatility on Friday, with silver plunging as much as 30% and gold falling nearly 10%—a sharp reversal following silver's record surge above $120 and gold's historic climb past $5,600 last week. From Thursday's highs to today's lows, gold has declined approximately 21% while silver has given up 41% of its value.

As of today's session, gold is trading at $4,677, down 4.38% or $212, having recovered from an intraday low of $4,400. Silver is trading at $79.74, down 6.44% or $5.50, after bouncing from approximately $71 earlier in the session. If the $4,400 level holds, it may represent a near-term floor for gold. 

The primary catalyst for the decline has been the strengthening dollar and reduced expectations for aggressive Federal Reserve rate cuts under President Trump's appointed Fed Chairman. However, this shift in monetary policy expectations may not be sufficient to derail the broader bullish case for precious metals. Key supporting factors remain intact: persistent geopolitical tensions, particularly surrounding a potential U.S.-Iran confrontation, ongoing central bank accumulation, and policy uncertainty from the White House. The one thing that it has accomplished is to strengthen the US dollar. The USDX rose for its fourth consecutive session gaining 0.46% now sitting at 97.64.

Market analysts are largely viewing the pullback as temporary. Sucden Financial noted Monday that precious metals retain their long-term safe-haven appeal and projected a "modest near-term recovery in the coming days."

JPMorgan analysts reinforced their bullish outlook, raising their year-end gold target to a record $6,300. The firm emphasized that "the long-term rally in gold has not and will not be linear," expecting the market to "digest, reset and repeat" given sustained demand from central banks and institutional investors.

Deutsche Bank's Michael Hsueh echoed this sentiment, maintaining the bank's $6,000 year-end gold forecast. Hsueh stated that "conditions do not appear primed for a sustained reversal in gold prices," attributing recent volatility to market dynamics rather than deteriorating fundamentals.

Wishing you as always good trading,