Key Points:
- Gold prices recovered to trade above $5,000 an ounce.
- China’s central bank extended its gold buying streak to 15 months.
- Silver surged 6% to top $82 after a recent crash.
- Chinese regulators advised banks to reduce holdings of US debt.
Gold prices climbed back above the massive $5,000 mark on Monday. Buyers rushed in to take advantage of lower prices following an exceptionally wild week for precious metals. The metal rose as much as 1.8%, recovering about half of the losses it suffered since plunging from its record high on January 29.
Analysts are watching this price level closely. Ahmad Assiri from Pepperstone Group noted that stabilizing above $5,000 is critical. It will determine if this is just a short-term bounce or if the market is ready to start a sustainable climb again.
A major driver behind this rally is continued demand from China. Data released over the weekend showed that the Chinese central bank bought gold for the 15th month in a row. Meanwhile, reports indicate that Chinese regulators have told their financial institutions to cut back on holding US Treasuries. Officials want to limit risks and diversify their assets, a move that weakens the US dollar and strengthens gold.
Silver is seeing even more extreme action than gold. After crashing hard and losing a third of its value recently, the white metal jumped 6% on Monday to top $82 an ounce. Traders noted that regular retail investors are buying the dip, pouring money into silver funds to help reverse the sharp losses.
Despite the recent volatility, major banks like Goldman Sachs and Deutsche Bank still believe in gold’s long-term value. They point to steady buying by central banks and global political uncertainty as reasons to stay bullish.
Politics are also shaking up the market. Kevin Warsh, President Donald Trump’s pick for the next Federal Reserve chair, voiced support for a new agreement between the central bank and the Treasury. This has raised concerns among investors about the Fed’s independence.
Traders are now waiting for new economic numbers to see where things go next. A jobs report coming this Wednesday and inflation data scheduled for Friday will provide clues on the Federal Reserve’s next moves.
