Precious metals markets experienced a broad decline today, with gold and silver prices falling significantly due to weak global trading volumes. This drop coincides with the continued closure of financial markets in the world's two largest economies, the United States and China, due to local holidays, resulting in a lack of liquidity and the catalysts that typically drive prices upward.
Details of price movements in global markets
In spot trading, silver fell sharply by 2.4% to $75.64 an ounce, after having gained 3% in previous sessions. Gold was not immune to this decline, dropping 1.1% in spot trading to $4,986.32 an ounce. US gold futures for April delivery also fell by 0.8%, settling at $5,005.60 an ounce.
The downward trend extended to other precious metals, with platinum falling 0.8% to $2,045.11 an ounce, while palladium dropped 0.7% to $1,673.52 an ounce.
The impact of public holidays and the absence of incentives
Experts attribute this decline primarily to the overlap of Presidents' Day in the United States with Lunar New Year celebrations in China. This rare and significant coincidence leads to a sharp drop in liquidity in these two major markets, making them more susceptible to price volatility even with limited selling pressure.
Commenting on these movements, Tim Waterer, senior market analyst at a specialist group, said: “Gold gave up some of its gains today following the release of the Consumer Price Index data due to lower trading volumes and a lack of new catalysts for further gains.” Waterer suggests that markets have already priced in the latest US inflation data and are now awaiting new economic data that will determine the path of the Federal Reserve's interest rate decision.
Economic context and the importance of precious metals
These movements are particularly significant given the role precious metals play as a safe haven and a hedge against inflation. When there is a lack of impactful economic news, investors tend to take profits, especially after previous price surges. Furthermore, silver, platinum, and palladium, in addition to being investment metals, are vital industrial metals, and their performance also reflects expectations of a potential slowdown in global industrial demand during the holiday season in China, the "world's factory" and the largest consumer of industrial metals.
