Gold and silver prices continued to fall on Monday, as CME Group's increased margin requirements exacerbated last week's sharp sell-off following Kevin Warsh's nomination for chairman of the US Federal Reserve, Reuters reports, writes UNN.
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Spot gold prices fell 3% to $4718.35 per ounce by 11:48 GMT (13:48 Kyiv time) after falling almost 10% earlier in the session. US gold futures for April delivery remained stable at $4740.90 per ounce.
On Friday, the price of the precious metal fell by 9.8% and dropped by approximately $900 from its record high of $5594.82 on January 29, erasing most of this year's gains. As Bloomberg notes, it was the largest drop in over a decade on Friday.
"Gold and silver are a roller coaster, and when you get to the top of the 'lift,' gravity takes over and you start to fall," said SP Angel analyst John Meyer.
Spot silver fell 3.3% to $81.75 an ounce after falling as much as 15% earlier in the session. Silver has fallen approximately 32% since reaching a record high of $121.64 last week.
Despite the collapse, analysts cautioned against viewing it as the beginning of a prolonged downturn.
"Conditions do not appear to be set for a sustained reversal in gold prices," said Michael Hsueh, precious metals analyst at Deutsche Bank, adding that investors "remain very interested in growth," pointing to continued volatility rather than a collapse in sentiment.
CME Group said on Friday that it would raise margin requirements for precious metals futures, with the changes taking effect after the market close on Monday.
"We've seen outflows from ETFs, and we suspect some brave hedge funds have picked them up from there," Meyer said.
Meanwhile, the dollar index continued to rise, making the dollar-denominated precious metal more expensive for overseas buyers.
On Friday, US President Donald Trump nominated former Fed official Kevin Warsh for chairman, effective in May, with markets expecting lower interest rates alongside tighter balance sheet policy.
Spot platinum prices fell 1.4% to $2132.55 per ounce, and palladium fell 2.7% to $1743.93.