Quick overview

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Investors in gold are generally hardy individuals who are accustomed to market fluctuations. However, the recent fluctuations have made even devoted gold bugs and the more recent generation of silver investors uneasy.

Gold

 

The record-breaking surge in precious metals came to an abrupt end on Friday, with silver experiencing its largest daily decline on record and gold plunging the most since 2013. On Monday, prices continued to decline. After that, gold increased by more than 6% to almost $4,950 per ounce on Tuesday, while silver increased by more than 10% to $87.

Investors had turned to gold amid geopolitical unrest and worries about the  Federal Reserve’s independence, especially gold-backed ETFs. In addition, central banks expanded their holdings of the well-known haven asset, and in recent weeks, a surge of Chinese speculation drove prices even higher.

There were already rumors that prices were about to drop before the announcement that President Donald Trump intended to name Kevin Warsh as Fed chair. Warsh is seen as the most hawkish of the remaining contenders, which heightened the anticipation of a stricter monetary policy that would support the dollar and devalue gold.

Investors are attempting to understand the mechanics behind the historic slump by exchanging theories and advice on social media sites and Reddit forums. Skeptics cautioned that the market had become crowded and might continue to be volatile as positions are reset, in addition to posters promising to “buy the dip.”.

While some suggested “zooming out,” pointing out that prices are still higher than they were a year ago, others bemoaned adding to their holdings just before the downturn and openly questioned whether they should act quickly in response.