A sharp short-term correction within a broader uptrend
The recent daily decline in gold and silver prices has been exceptionally severe – the largest seen so far this century. However, when viewed from a longer-term perspective using weekly charts, the move appears less dramatic.
On this timeframe, prices have not broken the sequence of higher highs and higher lows that has characterised the trend in recent years. Both metals remain comfortably above long-term reference levels such as the 52-week moving average.
From this perspective, the recent sell-off can be interpreted as a technical correction within an ongoing bull market rather than a definitive trend reversal. A Fibonacci retracement of the last six months of upward movement suggests that gold futures are approaching a correction of around 50%, a level that often attracts renewed buying interest.
Kevin Warsh, a stronger dollar, and pressure on alternative assets
The immediate catalyst for the decline was the emergence of Kevin Warsh as a leading candidate to chair the US Federal Reserve. Warsh is widely viewed as one of the most hawkish and orthodox figures under consideration. He has previously criticised the expansion of the Federal Reserve’s balance sheet, and markets have interpreted his potential appointment as signalling tighter monetary conditions and reduced liquidity in the future.