Gold Stages Strong Rebound as Rate Cut Bets and Geopolitics Fuel Demand
Gold prices recovered significantly during Friday's trading session, clawing back a portion of their recent declines. The sharp correction earlier in the week appeared to attract value buyers, while a softer US dollar further bolstered market sentiment. This recovery was underpinned by key economic and geopolitical developments that reinforced gold's appeal as a safe-haven asset.
Economic and Geopolitical Catalysts Drive Gold's Recovery
On the economic front, weaker-than-expected US labor market data strengthened expectations that the US Federal Reserve will implement an interest rate cut in June. This prospect typically supports non-yielding assets like gold, as lower rates reduce the opportunity cost of holding bullion. Simultaneously, high-stakes negotiations between Iran and the United States commenced in Oman on Friday, focusing on Tehran's nuclear program. Such geopolitical tensions often enhance demand for gold as a protective investment during periods of uncertainty.
Tracking this positive momentum, the April gold futures contract on the Comex exchange surged by $62 per ounce, reaching a daily high of $4,951. This impressive rally effectively erased the entire $61.3 loss recorded in the previous trading session, highlighting the metal's resilience amid volatile market conditions.
Silver Remains Under Intense Pressure, Extending Losses
In stark contrast, silver prices continued to face downward pressure, with the March silver contract on Comex falling an additional $13 per ounce to an intraday low of $63.90. This level marks a six-week low for the metal, which has been struggling to establish a solid floor after a spectacular rally that peaked in January 2026. During that period, silver prices soared past $121 per ounce, fueled by optimism regarding its dual role as both a precious metal and an industrial commodity.
However, analysts note that the earlier rally was largely driven by speculative positioning rather than a genuine increase in industrial demand. This speculative nature makes silver's price movements far more extreme compared to gold. Additionally, silver's significantly smaller market size tends to amplify volatility, contributing to its recent sharp declines.
Exchange Actions and Market Dynamics Intensify Volatility
Adding to the market turbulence, the CME Group raised margin requirements for gold and silver futures contracts on Thursday. This marked the third such increase in the past two weeks, as the exchange operator seeks to mitigate risks associated with heightened volatility in the precious metals sector. Higher margin requirements can reduce speculative trading, potentially impacting liquidity and price stability.
So far this week, Comex silver is down more than 4%, following a staggering 22.5% plunge last week, positioning it for a second consecutive weekly loss. Conversely, Comex gold has gained approximately 4% over the same period, despite experiencing sharp intra-week fluctuations. Both metals have witnessed wild price swings, partly due to a strengthening US dollar index, which has climbed 0.66% this week—its best weekly performance since November 2025.
The dollar's resurgence follows a period of weakness in January, when it lost over 1.15% amid policy uncertainty in Washington. The currency regained strength after US President Donald Trump nominated Kevin Warsh as the next Federal Reserve chair. Perceived as more hawkish than other candidates, Warsh's nomination led markets to anticipate a slower pace of potential rate cuts, boosting demand for the US dollar. A stronger dollar typically makes dollar-denominated commodities like gold and silver more expensive for holders of other currencies, adding pressure to precious metals.
Furthermore, the sharp run-up in prices earlier this year prompted profit-booking among investors, introducing another layer of downward pressure on precious metals that had previously surged with little resistance. As market participants navigate these complex dynamics, the divergence between gold's recovery and silver's struggles underscores the nuanced factors driving each metal's performance.
Disclaimer: We advise investors to consult with certified experts before making any investment decisions.
