Commodities retreat: gold and silver halt recent rally

Commodities are experiencing a sharp change of direction following the impressive rally of the past several days, with gold and silver particularly affected, now firmly in the red. The precious metals have halted their recent gains, plunging 5.53% and 14% today, respectively. Copper, which had shown strong momentum yesterday, also reversed course, losing 3.3%.

The decline is largely attributed to a rebound in the US dollar, which had weakened during the recent commodities rally, supporting higher metals prices. As the dollar regained strength, demand for dollar-denominated commodities fell, putting downward pressure on prices.

In addition to currency movements, profit-taking and the breach of key near-term support levels triggered stop-loss orders, which accelerated the sell-off and quickly erased much of the recent gains.

Traders and investors were caught off guard by the speed of the reversal, highlighting the volatility inherent in commodity markets. Analysts note that while this pullback appears severe, it is typical of highly speculative sectors and should not necessarily signal a longer-term trend reversal.

The sharp swings underscore the importance of risk management strategies, as well as careful monitoring of macroeconomic indicators such as currency strength, interest rate expectations, and geopolitical developments that can influence commodity prices.

Benedetta Zimone