Global financial markets witnessed a sharp decline in precious metal prices on Thursday, with gold and silver prices falling significantly under pressure from the strengthening US dollar. This move comes as investors await crucial economic data that could shape monetary policy in the coming period.
Details of the decline in gold and precious metals
In spot trading, gold prices fell 0.7% to $4,420.09 per ounce by 12:28 GMT. US gold futures (February delivery) were not immune to this decline, dropping 0.8% to settle at $4,427.70 per ounce.
The decline was not limited to the yellow metal alone, but the losses extended to other metals by larger percentages; silver prices plummeted by 4.3% to reach $74.8 per ounce, platinum suffered losses of 5.7% to record $2176.03, while palladium declined by 3% to reach $1712.18.
The US dollar is putting pressure on the markets
The main factor behind this general decline in metals is the rise of the US dollar index, which hovered near its highest level in a month. Historically, there is a strong inverse relationship between the value of the dollar and the prices of commodities priced in dollars; a stronger US currency makes gold and other metals more expensive for holders of other currencies, reducing demand and putting downward pressure on prices.
Investors are currently assessing a mixed bag of economic data, awaiting the week's biggest event: the release of the US non-farm payrolls report on Friday. This data is a key indicator the Federal Reserve uses to determine the path of interest rates, which in turn directly impacts the appeal of gold as a non-yielding asset.
Future predictions: Gold towards $5000
Despite the current downturn, the outlook for the precious metal remains very positive, according to some major financial institutions. HSBC, for example, issued a bold forecast suggesting that gold could reach $5,000 an ounce in the first half of 2026.
The bank bases its forecast on several key factors, most notably escalating geopolitical risks worldwide and rising sovereign debt levels, which reinforce gold's status as a safe haven against market instability. As for silver, the bank anticipates prices will range between $58 and $88 in 2026, driven by a global supply shortage and strong investment demand, coinciding with rising gold prices. However, it cautions that market corrections are possible later on.
