Silver and Gold Price Down as Commodities Retreat

Commodities have turned bearish in the last two days, with Copper, Silver and Gold price experiencing some heavy losses. Commodities have had gone through one of the strongest rallies in the last several months, with Copper and Gold prices making record highs every week, but the pullback in the last to days has been quite severe as well.

GOLD surged to a recent peak of $2,450 earlier this week but has since experienced three consecutive days of decline, reaching one-week lows. As of the latest update, the XAU/USD pair is trading at $2,332, marking a decline of 1.90% from its recent peak. The recent decline in gold prices can be attributed to positive US economic data, which has led to increased US Treasury yields and strengthened the US dollar.

Gold Chart H4 – MAs Have Been Broken

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Central banks in emerging markets have been actively purchasing Gold since Q3 2022, accumulating approximately 2,200 tones. This trend is largely influenced by geopolitical factors such as sanctions against Russia, which means that these countries are diversifying their USD reserves. That has been one of the reasons for the surge in Gold prices and will continue to play out for the remainder of this year.

But, the price reversed after reaching a high of $2,450 early this week and yesterday’s S&P Global May final assessment of the Manufacturing and Services PMI gave it another push lower. The report indicated an acceleration in US corporate activity, which contributed to the strengthening of the US dollar and rising Treasury yields, putting further pressure on Gold prices. Investor Federal Reserve’s rate cut expectations declined below 30 basis points of easing towards the end of this year, further dampening Gold’s appeal as an alternative investment.

Silver Chart H4 – Sellers Testing the 50 SMA

SILVER prices surged to $32.49 an ounce earlier this week, reaching their highest level in two years, driven by strong demand and optimism in the futures market. China’s rapid advancements in manufacturing solar panels and electric cars are pivotal in sustaining the upward trajectory of silver prices, which have risen by over 28% this year. The nation’s expanding capabilities in these sectors contribute to the growing global demand for physical silver. However, high prices are deterring buyers at the moment.

Silver prices experienced a decline of more than 2% on Thursday in response to US economic data suggesting robust business activity despite elevated interest rates. XAG/USD traded slightly above $30 at the end of the day, marking a decline of 2.2%. However, the drop in XAG/USD from the peak of $32.49 is viewed as a correction within the broader positive trend which has been going on for almost two years. The psychological level of $30.00 serves as the initial support for XAG/USD, followed by the former resistance-turned-support at $29.79 and then the $29.00 level.

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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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