Precious metals plunged again overnight in some of the most dramatic moves ever seen in gold and silver. Gold came within a few dollars of $4,400 this morning. That low represented a decline of 21% from the all-time high of $5,595 hit on Thursday morning.
It has managed to bounce since then, and, at the time of writing, was closing in on $4,800 per ounce – itself a 9% move in just a few hours.
But the damage to silver was even more dramatic. It collapsed by over 30% on Friday to post its worst daily fall since 1980. Overnight, it hit a low of $71.34. This marked a drop of 41% from Thursday’s high of $121.67. What may have begun as profit-taking turned into an absolute rout, leaving traders who were late to the party seriously out of pocket.
Source: TN Trader
As many have repeatedly warned, the atmosphere had become very thin as prices hit a succession of all-time highs this year. The move was compounded by a sharp snap-back in the US dollar after the greenback hit multi-year lows against both the euro and British pound.
So, what next? Does this signal that the bubble in precious metals has finally burst, or has this selloff simply blown the froth off the frothiest of frothy markets?
For now, there’s a bounce-back in response to the speed and scale of the plunge. That may encourage traders to think that the worst is over, and that the bull market is back on track. Maybe. But if this rally is eventually curtained by a fresh round of selling, then the prospect of new highs starts to dim.
