Gold and silver retreat from all-time highs amid strong volatility

The prices of gold and the silver recorded a strong correction after reaching record levels. This correction would be associated, in part, with the high volatility experienced by the precious metals market and an abrupt turn in investor behavior.

The Central Bank expanded the limit for pension funds, although the adjustment would have a limited impact on the demand for dollars.

At the end of 1:30 p.m., spot gold fell 1.3% and closed at US$5,330.2 per ounce. The metal reversed course and fell more than 5% to a session low of US$5,109.62 after hitting an all-time high of US$5,594.82 the day before.

Additionally, US gold futures for February delivery fell 0.3% to close at US$5,318.4.

Silver also fell sharply, in a movement that analysts described as a “whiplash” of the market, after a price rally driven by intense buying in previous sessions. The rapid reversal highlighted the fragility of the recent rally and the market’s sensitivity to changes in sentiment.

Spot silver fell 2.1% and stood at US$114.14 an ounce, after having reached US$121.64. So far this month, the metal has accumulated an increase of more than 60%, driven by a shortage of supply and speculative purchases.

Profit taking

According to an article in the Financial Times, part of the fall in precious metals prices was associated with aggressive selling, after many investors chose to lock in profits following the strong rally.

The dynamics suggest that recent demand was driven, to a large extent, by speculative flows rather than by structural changes in the fundamentals of physical supply and demand.

Another factor that influenced the decline was the behavior of the broader financial markets. Movements in other assets, such as adjustments in the stock markets and variations in the dollar, would have led some participants to reduce positions in precious metals to cover losses or redistribute capital, intensifying the downward pressure.

Despite the correction, the Financial Times points out that the accumulated performance of gold and silver remains high, although the episode reinforces warnings about the risk of abrupt movements in a context of high macroeconomic and financial uncertainty.