Historic Precious Metals Selloff Continues
Precious metals markets are experiencing their most significant downturn in four decades, with gold and silver prices continuing their dramatic descent following recent record highs. The selloff began Friday and accelerated through Monday, catching many investors off guard.
Unprecedented Price Declines
Spot gold prices plummeted over 12% on Friday – the largest single-day drop since 1983 according to market data – before falling another 10% on Monday to nearly $4,400 per ounce. Silver’s decline proved even more severe, collapsing 26% Friday followed by an additional 13% decline at Monday’s opening.
“The velocity of this correction has exceeded most expectations,” noted Ipek Ozkardeskaya, senior analyst at Swissquote. “Losses are accumulating faster than analysts can update their projections.”
Technical Breakdown Signals Further Declines
Market technicians indicate silver has broken through two critical support levels, suggesting the white metal has entered what analysts describe as a “bearish consolidation phase.” The next significant technical threshold appears around $70 per ounce, which market participants suggest might temporarily halt the downward momentum.
Conflicting Forecasts on Gold’s Trajectory
Analysts remain divided on precious metals’ near-term prospects. Some institutions maintain bullish outlooks, citing unchanged fundamentals including geopolitical uncertainty and sustained Asian demand. “Market conditions don’t indicate a prolonged reversal,” stated Deutsche Bank analyst Michael Hsueh, whose firm maintains a $6,000 gold price target.
Conversely, other analysts predict continued declines, suggesting recent highs resulted from speculative trading and fear-of-missing-out (FOMO) psychology. One research group forecasts gold could retreat to $3,500 per ounce by year-end.
Volatility Surpasses Cryptocurrency Benchmark
Notably, gold’s 30-day volatility spiked above 44% following Friday’s collapse – exceeding Bitcoin’s 39% volatility metric. This marks only the third time since Bitcoin’s creation that gold has demonstrated greater price swings, with the previous occurrence happening during heightened trade tensions in May.
Economic Context
The metals selloff coincides with economic concerns as recent data indicates Canada’s economy stalled in November. Preliminary estimates suggest marginal 0.1% growth in December would still result in a 0.5% annualized contraction for the fourth quarter.
“Given this sluggish economic performance and ongoing trade uncertainties, growth appears constrained to approximately 1% for the coming year,” commented Douglas Porter, Chief Economist at BMO Capital Markets.
