Gold and silver prices soared on Tuesday, with gold posting its biggest single-day gain since November 2008 as investors bought up the metals following the biggest two-day decline in decades.
Spot gold rose 5.5% to $4,921.42 an ounce by 0944 GMT. It has rebounded from Monday’s low of $4,403.24, but last week’s $5,594.82 per ounce remains a historic high for now.
U.S. gold futures for April delivery rose 6.3% to $4,945.60 an ounce.
After posting a record 27% one-day drop on Friday, silver jumped 9.2% to $86.7 an ounce on Tuesday and fell another 6% on Monday.
“The market was oversold after President Donald Trump announced he would nominate Kevin Warsh to be the next Federal Reserve Chairman. What we’re seeing today is a rebound,” said Peter Fertig, an analyst at Quantitative Commodities Research.
“We also see that investors who were selling for a profit now find prices attractive again to buy.”
While investors expect Mr. Warsh to support rate cuts, they also expect him to tighten the Fed’s balance sheet, a move that typically supports the dollar.
Meanwhile, CME Group also raised margin requirements on precious metals futures, further compressing prices.
However, analysts believe the yellow metal’s bull run continues and expect it to reach new record highs later this year.
“Gold has now cleared the first retracement hurdle at $4,858 and has shifted focus to the 50% retracement of recent weakness at $5,000. For silver, the equivalent levels are even higher at $90.58 and $96.52,” said Ole Hansen, Head of Commodities Strategy at Saxo Bank.
Meanwhile, the U.S. Bureau of Labor Statistics announced Monday that due to the partial federal government shutdown, the closely watched employment report for January will not be released this Friday.
Among other metals, spot platinum rose 5.3% to $2,233.95 an ounce after hitting a record high of $2,918.80 on January 26, while palladium rose 4.2% to $1,792.35.
