Gold posts biggest daily gain since 2008 as investors buy after steep selloff
Gold and silver rebounded sharply Tuesday, with gold up about 5% and silver climbing 8.6% after a two-day rout. Analysts say oversold conditions and renewed buying lifted prices.
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By Torontoer Staff
Gold and silver rallied sharply on Tuesday, with spot gold jumping about 4.9 per cent and set for its largest one-day gain since November 2008. The move followed the metals' steepest two-day selloff in decades and a wave of buying from investors viewing lower prices as attractive entry points.
Spot gold traded at US$4,895.69 an ounce by 6:20 a.m. ET, recovering from Monday's low near US$4,403.24. US gold futures for April delivery rose 5.7 per cent to US$4,918.10 an ounce. Silver surged 8.6 per cent to US$86.30 an ounce, after a record 27 per cent one-day drop on Friday and a further 6 per cent decline on Monday.
Drivers of the rebound
Traders said the market was oversold after the White House announcement that Donald Trump planned to nominate Kevin Warsh as the next Federal Reserve chair. That announcement prompted a sharp unwind of leveraged positions, and buyers stepped in once prices fell to what they considered compelling levels.
The market was oversold after the announcement of U.S. President Donald Trump to nominate Kevin Warsh as the next Federal Reserve chairman. What we see today is a rebound, You also see investors who have sold on profit taking are now regarding the prices as attractive again for buying.
Peter Fertig, Quantitative Commodity Research
Expectations about Warsh's policy leanings added complexity. Some investors expected him to favour rate cuts, which can support commodities, but also to pursue balance-sheet tightening at the Fed, a step that typically strengthens the US dollar and can weigh on metal prices.
Margin changes at exchanges added short-term pressure. The CME Group raised margin requirements on precious-metals futures during the selloff, forcing some traders to close positions and exacerbating price moves.
Where prices could go next
Analysts say the rebound could be the start of a renewed leg higher for gold, with technical levels now in focus. After clearing an initial retracement, momentum traders will watch round-number barriers and the 50 per cent retracement of the recent slump.
Gold has now cleared its first retracement hurdle at US$4,858, shifting focus toward US$5,000, the 50 per cent retracement of the latest slump. For silver, the equivalent levels sit higher at US$90.58 and US$96.52.
Ole Hansen, Head of Commodity Strategy, Saxo Bank
- Near-term resistance for gold: US$4,858 then US$5,000.
- Silver targets cited by analysts: US$90.58 and US$96.52.
- Other precious metals also rose: spot platinum and palladium gained more than 4 per cent.
Market participants are also watching US economic data and policy developments. The US Bureau of Labor Statistics said an employment report for January would not be released as scheduled because of a partial federal government shutdown, removing one near-term data point for traders.
Other metals and market context
Platinum climbed about 5.1 per cent to US$2,228.84 an ounce, after hitting a record high of US$2,918.80 on January 26. Palladium rose roughly 4.5 per cent to US$1,796.44 an ounce. The broader rebound in precious metals reflected forced liquidations easing and fresh speculative and physical buying.
For investors, the recent volatility underscores the importance of risk management in commodity markets. Sharp margin calls and rapid moves can produce dramatic reversals, and traders often adjust exposure quickly in response to policy signals and liquidity changes.
Looking ahead, analysts expect gold to test new highs later in the year if demand and macro conditions remain supportive, but they caution that policy shifts and exchange margin rules can produce sharp, short-term swings.
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