Volatility in gold and silver markets is expected to remain high after the recent crash from record highs, according to Bank of America. One measure indicates gold prices are experiencing instability not seen since the 2008 financial crisis, while silver’s market turmoil is the worst since 1980. Both metals surged last month, fuelled by speculators, geopolitical concerns, and anxiety over the Federal Reserve’s independence, before abruptly halting late last week. Gold experienced its biggest drop in over a decade, and silver had its worst day on record.
Niklas Westermark, head of EMEA commodities trading at Bank of America, anticipates higher volatility than in the past, though perhaps not as extreme as recent days unless another speculative bubble forms. “We’ve had a washout now over the last two sessions that I think has cleaned up the market to a good extent,” Westermark said. The recent correction may have stabilised the market after the sharp rise and subsequent fall.
Gold and silver rebounded on Tuesday (Wednesday AEDT) as investors bought the dip. Westermark noted that gold has a stronger, longer-term investment outlook. He suggested that while inflated prices and market turmoil may impact position sizes, overall investor interest should remain robust.
Around 3:15pm in New York, spot gold was up 5.6 per cent to $US4920.91 an ounce. At 3:06pm, silver had risen 8.6 per cent to $US83.65. Bank of America is a global financial institution that provides a range of banking, investment, asset management, and other financial and risk management products and services to individuals, small- and middle-market businesses, and large corporations.
