International gold prices plunged after previously hitting a record high of $5,595 per ounce. As of the close of trading on the 30th Eastern Time, gold prices were quoted at $4,893.2 per ounce, down $434.45 or 8.15%. Silver prices were quoted at $85.34 per ounce, down $29.16 or 25.46%.
There are rumors that former Fed Governor Worsch will be appointed by Trump as the next chairman. Analysts say that due to his historically hawkish policy stance and steady style, once in office he is expected to maintain the independence of the Fed, which will be positive for the US dollar but negative for gold prices.
OCBC strategist Christopher Wong said that even though reports of Worsch’s nomination triggered the gold price correction, the market correction had long been coming. “It’s like one of the excuses the market was waiting for in order to digest the parabolic price action.”
● Analysts: May Have Reached Frenzy Peak
Gold had previously risen for eight consecutive days. Phil Streible, chief market strategist at Blue Line Futures, said, “It seems like we’ve reached some sort of mania peak.” Carsten Menke, analyst at Swiss bank Julius Baer, said, “Due to a bubble market and flows dominating fundamentals, it doesn’t take much to trigger a pullback.” In fact, gold’s Relative Strength Index (RSI) soared above 90, and silver’s RSI was around 84. An RSI above 70 indicates overbought conditions.
Simon Beddow, head of precious metals at broker Tullet Prebon under TP ICAP Group, said that the extent and duration of the gold price rally has gradually limited banks’ ability to establish positions, reducing liquidity and increasing volatility. He said, “Banks’ balance sheets for trading precious metals aren’t infinite. With the reduction of risks they bear, trading volume has already declined.”
● UBS Optimistic: May Reach $6,200 in First Three Quarters
Although gold prices pulled back on Friday, UBS Global Wealth Management said gold remains an attractive asset and strong hedge. Two of the bank’s analysts stated in a report on Thursday that, driven by increased investment activity, gold prices are expected to reach $6,200 per ounce in the first three quarters of this year.