Gold steadied after ending a four-day rally and falling below the 4,000 mark, as a stronger U.S. dollar and stock market volatility triggered profit-taking among bulls.
Gold prices stabilized after falling below the $4,000 per ounce mark in the previous trading session, closing at $3,987.04 per ounce on Friday, down 1.6% from the prior day.
According to Zhitong Finance APP, gold prices stabilized after falling below the $4,000 per ounce threshold in the previous trading session, closing at $3,987.04 per ounce on Friday, down 1.6% from the prior day. This followed a rapid four-day rally in gold prices, which had hit a record high of $4,059.31 per ounce on Wednesday.Technical IndicatorsIndicators showed that gold prices had been in an overbought condition for most of the past month, prompting some investors to take profits. Meanwhile, silver prices extended their decline, retreating after hitting a more than 40-year high of $51.235 per ounce on Thursday. Despite this, silver has surged approximately 70% year-to-date, significantly outperforming gold during the same period.
Figure 1
This volatility in precious metals coincided with a downturn in the U.S. stock market on Thursday. Although gold is typically regarded as asafe-haven assetsafe haven during periods of market turbulence, it can also move in tandem with risk assets when investors need to liquidate positions to cover losses in other markets. Nevertheless, gold prices remain on track for an eighth consecutive weekly gain.
Chris Weston, Head of Research at Pepperstone Group, noted that during U.S. trading hours, gold, silver, cryptocurrencies, and most constituents of the S&P 500 moved in tandem, albeit with varying degrees of volatility.Technically, the market shows signs of cooling off, with the strong momentum of consecutive new highs fading, prompting some traders to rush to reduce their long positions to lock in profits.
The recent rise in precious metals has been driven by the “currency devaluation trade,” with investors flocking to assets perceived as safe havens such as Bitcoin, gold, and silver, while exiting major currencies like the U.S. dollar. Concerns over inflationary pressures, unsustainable U.S. fiscal policy, and threats to the Federal Reserve’s independence have continued to boost the appeal of precious metals.
As of this writing, spot gold prices hovered near $3,987 per ounce, while the Bloomberg Dollar Index remained largely flat after hitting a 10-week high in the previous session; silver fell 0.2%, following a 4.8% surge on Thursday.
Figure 2
Although silver exhibits a strong correlation with gold and is significantly influenced by the U.S. dollar and interest rates, its industrial applications cannot be ignored—sectors such as solar panels and wind turbines account for more than half of its total demand. It is projected that the silver market will face a supply deficit for the fifth consecutive year in 2025.
The London silver market is currently experiencing an unprecedented tightening, with borrowing costs surging. Market participants are concerned that the U.S. may impose additional tariffs on silver this year, prompting traders to rush shipments of silver to the U.S. As a result, London inventories are being rapidly depleted, reducing the availability of lendable silver.
