Precious Metals Plunge Deepens as Gold Suffers Worst Selloff in Four Decades
The bloodbath in precious metals showed no signs of abating Monday as cascading liquidations sent gold and silver tumbling further, compounding losses from last week’s historic crash.
Gold prices in the spot market dropped another 6.1% to $4,565.79 an ounce, building on Friday’s devastating 9% decline – the steepest single-session loss the yellow metal has experienced since 1983. In just days, gold has surrendered over $1,000 from its record peak of $5,594.82 reached Thursday, effectively wiping out the bulk of this year’s impressive rally. April gold futures in the US retreated 3.3% to $4,586.20.
Silver fared even worse, cratering 12% to $74.48 per ounce following Friday’s unprecedented 27% plunge – its most severe daily loss ever recorded. The white metal has now collapsed roughly 40% from the all-time high of $121.64 set just last week.
The selloff gained momentum after CME Group, the world’s leading derivatives marketplace, announced elevated margin requirements for precious metals contracts over the weekend, effective after Monday’s close.
Market observers point to Kevin Warsh’s surprise nomination as the next Federal Reserve chairman as the spark that ignited the inferno. Known for his hawkish stance on inflation and skepticism toward quantitative easing, Warsh is viewed as dollar-friendly – a headwind for gold.
“While the Warsh announcement may have lit the fuse, it hardly explains the magnitude of this collapse,” noted Tim Waterer, chief trade analyst at KCM. “What we’re witnessing is a self-reinforcing cycle of forced selling and margin-driven liquidations.”
The carnage has spilled beyond precious metals, dragging down Asian equities and US stock futures as overleveraged traders scramble to meet margin calls by offloading other holdings.
Technical analysts suggest gold could slide further toward the $4,361-$4,476 range after breaking below crucial support at $4,662.
Despite the turmoil, some remain optimistic about gold’s trajectory. JP Morgan analysts maintained their bullish medium-term outlook, citing ongoing structural diversification away from paper assets toward tangible commodities.
“The broader fundamentals supporting gold haven’t changed,” said Ilya Spivak of Tastylive. “This appears to be a speculative shakeout rather than a fundamental shift.”
Elsewhere in the complex, platinum tumbled 9.4% to $1,958.93 after touching a record $2,918.80 late last month, while palladium declined 5.1% to $1,611.86.
