Gold, silver prices continue to fall after Trump picks Wersch to lead Fed
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The wild swings in financial markets overnight calmed down as Wall Street opened for trading on Monday. US stocks have remained relatively steady after gains in Europe and sharp declines in Asia, while gold and silver prices have recovered from earlier sharp declines.
The center of activity in the financial markets was again precious metals, where momentum came to an abrupt halt after the price of gold almost doubled in 12 months.
Gold briefly fell below $4,500 US an ounce overnight, more than $1,000 below its high point last week. It later erased most of that loss and recovered to $4,725.00, down 0.5 percent from Friday.
The price of silver has been rising even faster recently, going from a nine percent decline to a three percent gain overnight.
Gold and silver prices were rising earlier as investors sought safe haven assets amid a variety of concerns, including a Federal Reserve that could become less independent, a U.S. stock market that critics say is expensive, the threat of tariffs and huge debt loads for governments around the world.
Their prices fell on Friday, which also included a 31.4 percent fall in silver. Some on Wall Street saw it as a result of President Donald Trump nominating Kevin Wersh as the next chairman of the US central bank, the Fed.
Warsh’s reputation as a former Fed governor may have raised expectations among some investors that he could keep interest rates high to fight inflation, reducing the need to hide in gold and silver for safety.
But many on Wall Street are skeptical of even that preliminary study and say Trump is expected to cut the interest rates the president is demanding.
The Fed Chairman has a major influence on the economy and markets around the world by helping to direct how the US central bank will raise interest rates. This affects the prices of all types of investments, as the Fed tries to keep the US job market going without letting inflation get out of control.
According to Darrell Cronk, chief investment officer of Wealth & Investment Management at Wells Fargo, gold and silver’s recent declines are more likely to be the ruin of some traders who had borrowed money to bet on rising metals prices, rather than a drastic change in demand for the metals.
At the start of the trading day, the S&P 500 fell 0.1 percent and is on track for its fourth consecutive decline. As of 9:35 a.m. ET the Dow Jones Industrial Average was up 111 points, or 0.2 percent, and the Nasdaq Composite was down 0.3 percent.
Big technology stocks weighed on the market, including a 2.2 percent decline in Nvidia, whose chips are powering much of the world’s advances in artificial intelligence technology. The loss was even worse in Asia, where AI winners fell. South Korea’s Kospi fell 5.3 percent, its worst day on record in nearly 10 months, after chip company SK Hynix fell nearly nine percent.
