Gold, silver and oil prices plunge in global markets

A number of key commodities, including gold, silver, crude oil and copper, have seen significant declines in international markets. Investors have shifted away from risky investments as global geopolitical tensions eased somewhat following a phone call between top leaders of China and the United States and news of a possible US-Iran meeting. Reuters reported this on Thursday (February 5).

Silver was the worst-hit, with its price falling by about 15 percent. At the same time, gold, crude oil and copper prices fell by an average of about 2 percent. According to analysts, selling pressure in the commodity market has increased due to the strengthening of the US dollar, because international commodity prices are determined in dollars.

Tony Sycamore, an analyst at brokerage IG, said that unusual price fluctuations have been observed in various commodities, including precious metals, this week. According to him, the current decline is a continuous reaction to that instability.

He also said that the oil market has eased the long-standing geopolitical risk pressure due to signs of resumption of talks between the United States and Iran. In addition, investors are interested in selling gold at high prices as trade tensions eased after a phone call between President Donald Trump and Chinese President Xi Jinping.

Meanwhile, the dollar was stable in Asian trading ahead of interest rate decisions by the European Central Bank and the Bank of England. The dollar index is near a two-week high. The strong dollar makes it more expensive for investors in other currencies to buy goods, which negatively affects prices.

Commodity prices also came under pressure earlier in the week when Trump hinted at nominating Kevin Warsh as a possible Federal Reserve chairman. Fears of tighter monetary policy strengthened the dollar and reduced the appeal of gold and silver as non-interest-bearing assets.

The United States and Iran agreed to meet in Oman on Friday, reducing the risk of military conflict in the Middle East, which has affected oil prices. As a result, oil prices fell by about 2 percent.

The copper market is also under pressure. Investors are cautious on concerns about demand and reports of increased inventories at the London Metal Exchange. Although prices had previously risen slightly after China announced a strategic increase in copper inventories.

Christopher Wong, a strategist at OCBC Bank, said that due to low liquidity in the market, when a sale starts in one sector, it quickly spreads to other sectors, resulting in a sharper decline. This has also affected precious metals, cryptocurrencies and regional stock markets.

However, soybean prices rose compared to other commodities to a two-month high. Trump's comments - China is considering importing soybeans from the United States - have been positively reacted to the market. On the other hand, iron ore prices have also fallen by about 2 percent due to excess inventory.