Silver and gold prices plummet as massive wave of speculation, analysts say, unwinds

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There have been huge price falls in commodities markets including for oil, gold and silver. The price of silver has plummeted roughly 50 per cent from its record high in late January. Gold has also fallen into a bear market with the precious metal down close to 30 per cent since its peak. State Street senior strategist Clive Maguchu says precious metals prices had broken away from the fundamentals. "It obviously starts with the fundamentals. I think gold, as everyone knows, is a really great geopolitical risk hedge. And over the last couple of years, we've seen a pickup in geopolitical risk, and that's driven gold prices higher. And that led to greater interest from investors and investors who weren't maybe so familiar with the story."

Mr Maguchu said that led to a "speculative run up" in both gold and silver, with silver being "sort of the secondary gold play over there."

State Street also believes the price of gold has slumped because of an expectation that "the inflation problem is not going away."

If elevated inflation does not "go away", central banks may increase interest rates further, which leads to further falls in gold, for example, as investors seek the yields from interest rate assets.

"It means that the Reserve Bank will probably be more hawkish ... like having a bias towards raising rates a little bit more."

The local share market spent much of the session in a holding pattern. By the close Friday the S&P/ASX 200 has gained 15 points or 0.18 per cent to 8,764. The index has lost 0.73 per cent over the week but is virtually unchanged year to date. The benchmark index is now 3.5 per cent of its 2025 record closing high.

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