Institutions: Walsh Nomination Triggers Precious Metals Crash, End-of-Month Rebalancing Further Intensifies Selling

Odaily News On Friday, gold suffered its largest decline in four decades, while silver recorded a record intraday plunge, marking a sharp reversal of the rally that had previously driven gold prices to repeated new highs. Investor enthusiasm for precious metals over the past year had reached unprecedented levels, shocking experienced traders and leading to unusual price volatility. As Trump had previously signaled tolerance for a weaker dollar, investors had been pouring into the metals market, but the dollar's rebound dampened their sentiment. Traders view Walsh as the most staunch inflation fighter among the final candidates, raising expectations for monetary policy that would support the dollar and weaken dollar-denominated gold. "Trump's announcement nominating Walsh as the next Fed Chair is positive for the dollar and negative for precious metals," said Akash Doshi, Global Head of Gold and Metals Strategy at State Street Investment Management. "This may also be exacerbated by end-of-month portfolio rebalancing—as shorting the dollar and going long on precious metals has been the consensus macro trade over the past two to three weeks." (Jin10)