Volatility in Gold and Silver Continues Under Pressure from Strong Dollar Amid Powell's Firm Stance

Global commodity markets are experiencing a period of intense turbulence, with precious metals such as gold and silver facing significant pressure as investors recalibrate their positions. The repricing of assets reflects a reassessment of expectations regarding Federal Reserve monetary policy, particularly concerning the possibility of Jerome Powell maintaining a more restrictive approach for an extended period.

Commodity Markets Record Widespread Liquidations

Monday was marked by massive outflows across various segments of the commodity market. Not only are gold and silver depreciating, but crude oil and industrial metals are also experiencing sharp declines. According to analyses from the Jin10 platform, this synchronized movement across different asset classes signals a shift in investor perception of the macroeconomic outlook.

According to Vivek Dhar, commodities strategist at CBA, the market dynamics reveal a more aggressive interpretation of the Federal Reserve chairman’s stance. “The fact that investors are liquidating precious metals simultaneously with U.S. equities indicates that the market now perceives Powell maintaining a more hawkish stance,” Dhar explains. This behavior contrasts with previous periods when movements in equities and commodities followed different trajectories.

U.S. Dollar Strengthening Amplifies Pressure on Precious Metals

The appreciation of the U.S. dollar acts as an additional catalyst for pressure on silver-gold and other commodities. A stronger dollar raises the cost of acquiring these raw materials for international investors, reducing global demand. The cascading effect extends not only to precious metals but also to crude oil and industrial metals used in manufacturing.

Asian stock markets closely followed U.S. futures, reflecting a widespread risk aversion that marks the start of this week filled with corporate earnings reports, central bank statements, and key macroeconomic indicators. The “significant shock” in precious metals prices further amplified this defensive sentiment among market participants.

Strategists See Opportunity in Temporary Price Correction

Despite the magnitude of recent movements, Vivek Dhar warns against alarmist interpretations. For the strategist, the fundamental question remains unanswered: “Are we witnessing the beginning of a lasting structural decline in commodity prices, or is this a tactical correction?” Dhar questions. “Our view is that this is a market adjustment that presents a buying opportunity, not a change in long-term fundamentals.”

Dhar reaffirms his constructive outlook for gold in the coming quarters, maintaining his projection that the metal will reach $6,000 in the fourth quarter. Even after recent shocks in the precious metals segment, the analyst remains confident that structural supply and demand factors will continue to support high prices for gold and silver, turning the current volatility into a potential entry point for medium-term investors.