U.S. gold futures for February fell 2.8% to $5,156.20.“We are seeing a dramatic sell-off after precious metals hit new recent all-time highs,” said David Meger, director of metals trading at High Ridge Futures.
However, spot gold prices are still up 19% this month and 3.6% so far this week.
From cryptocurrency to central banks, demand for gold is increasing because “precious metals are in the spotlight and investors always like to go somewhere where they can earn high returns,” said Brian Lan, managing director of GoldSilver Central.
Adding to geopolitical uncertainty, US President Donald Trump on Wednesday pressured Iran to negotiate a nuclear deal, while Tehran threatened retaliation against the US, Israel and allies. On Wednesday, the CEO of crypto group Tether said it plans to allocate 10% to 15% of its investment portfolio to physical gold, while the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, saw its holdings rise to the highest level in almost four years. The US Federal Reserve left interest rates unchanged on Wednesday as investors waited for Trump to announce a replacement for central bank Chairman Jerome Powell, whose term ends in May. Markets expect the central bank to cut interest rates in June.
Spot silver lost 6.6% to $108.84 an ounce after reaching $121.64. So far this year, interest rates are up more than 50%, fueled by supply shortages and momentum buying.
The silver, platinum and palladium markets are small compared to gold or the S&P 500, making them vulnerable to speculative inflows that leave prices “completely disconnected from where physical demand is robust,” said Guy Wolf, global head of market analysis at Marex. Platinum fell 1.7% to $2,650.15 an ounce after hitting a record high of $2,918.80 on Monday, while palladium fell 6.7% to $1,935.
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