Today was ugly all around and what a dramatic shift it was for the precious metals market. That downturn set off a sector-wide cascade that tanked the whole industry. Spot silver was down 7.6% and currently trades at $48.49 an ounce. This steep drop has sent the worst kind of domino effect through gold and other metals. With the release of the U.S. consumer price index report for September coming up later this week, market volatility is escalating. This market downturn occurs against the backdrop of a dramatic turn in investor sentiment.
Last month’s U.S. consumer price index report was delayed due to the recent government shutdown. It was, perhaps miraculously, rescheduled for release on Friday. Analysts expect it to show a decrease of 3.1% year-on-year, contributing to the mixed signals that are creating a wild card market environment.
Gold prices, which reached a new record high of $4,381.21 on Monday, crashed today. They were 5.5% lower in early-morning trading, closing at a one-week low of $4,115.26 per ounce. This drop is the largest we’ve experienced since August 2020. It follows a year in which gold prices jumped close to 60%.
Geopolitical tensions and economic uncertainty have fueled the recent gold and silver spikes. Sustained buying from central banks has stoked this uptick even more. Today’s downturn indicates a change in the wind. The dollar index rose by 0.4%. With the dollar continuing to climb, that effect was characteristic of measures tightening the outlook for precious metals.
Platinum and palladium tumbled along with gold, dropping sharply lower. Platinum fell by 5.9%, closing at $1,541.85 per ounce, and palladium fell 5.3% to $1,417.25 per ounce.
Market analysts are reading these trends through a glass darkly. Tai Wong noted, “Gold dips were being bought as recently as yesterday, but the sharp jump in volatility at the highs over the past week is flashing caution and may encourage at least short-term profit-taking.” Additionally, Jim Wyckoff commented on the prevailing market sentiment: “Better risk appetite in the general marketplace early this week is bearish for the safe-haven metals.”
Investors are getting ready for the September consumer price index report on Wednesday. At the same time, the precious metals market continues to reflect a less straightforward balance of investor angst, economic factors, and extenuating market pressures.