PRECIOUS metals continued to reel from the sharp corrective sell-down recorded in the prior week, as the market extended its de-risking phase amid a shift in broader asset allocation.
The earlier momentum-driven rally in metals has given way to a more discerning and selective environment.
“Silver remained under significant pressure, extending its losses after a steep decline of approximately -17% week-on-week (wow) recorded in the previous week,” said MBSB Research.
During the current week, silver fell by a further -7% wow, highlighting the metal’s vulnerability during periods of tightening liquidity and reduced speculative appetite.
The continuation of losses suggests that positioning unwinds are still ongoing. In contrast, gold exhibited relative stability, managing to appreciate marginally by +1.97% wow after having declined by roughly -2.4% wow during the previous week.
“This modest rebound indicates that gold continues to attract defensive and strategic demand, even as broader precious metal sentiment remains fragile. The divergence between gold and silver reinforces gold’s role as a capital-preservation asset rather than a momentum trade,” said MBSB.
Copper, meanwhile, traded largely sideways, both during the week and on a year-todate basis. The lack of directional movement suggests that industrial demand expectations remain balanced, with no strong conviction toward either a global growth acceleration or a sharp slowdown.
Following the aggressive sell-down in metals, market flows began to reflect a clear rotational shift, coinciding with a rebound in the U.S. Dollar Index (DXY) on the 30th. The strengthening of the dollar acted as a headwind for precious metals, further discouraging fresh inflows into the space.
“During the week, the dollar drew strength from the nomination of Kevin Warsh as the next Federal Reserve Chair. Markets interpreted this as a hawkish shift, with expectations that he might favour a more cautious approach to rate cuts,” said MBSB.
Aside from that, with tech stocks, gold, silver, and bitcoin seeing some correction, this chaos pushed investors back into the liquidity of the US Dollar. —Feb 10, 2025
Main image: Goldstar Jewellers
