During Asian trading on February 2, spot gold fell by more than nine per cent to about Ksh572,000 per ounce, while silver dropped roughly 15 per cent, trading below Ksh9,300 per ounce.
The sell-off follows a strong rally in January, when prices surged as central banks increased bullion purchases and investors sought safe-haven assets amid global economic and geopolitical uncertainty.
Concerns over the independence of the US Federal Reserve had also fuelled the rally. However, sentiment shifted sharply late last week after US President Donald Trump announced finance veteran Kevin Warsh as his nominee to lead the central bank, easing fears of political interference.
Precious metals had enjoyed a standout performance in 2025, with gold recording its strongest annual gains since 1979. Prices repeatedly set new records as markets reacted to trade tensions, tariff threats and worries that valuations in artificial intelligence-linked stocks had become overstretched.
Gold peaked above Ksh716,000 per ounce in late January, while silver climbed to a record level of more than Ksh15,500. Analysts on Wall Street continue to expect at least two interest rate cuts by the Federal Reserve in 2026 — a backdrop that typically supports gold, which performs better when borrowing costs are low.
The sharp reversal came on Friday, January 30, when spot gold suffered its steepest single-day decline since 1983, falling over nine per cent. Silver recorded an even steeper drop, plunging by more than 25 per cent.
Despite the recent slump, longer-term demand for precious metals has been supported by persistent inflation, a weaker US dollar and sustained buying by central banks worldwide. Ongoing conflicts in Ukraine and Gaza have also contributed to investor demand for safe-haven assets.
Gold’s appeal is further underpinned by its scarcity. According to the World Gold Council, only about 216,000 tonnes of the metal have ever been mined — an amount that would fill just three to four Olympic-sized swimming pools.
Market analysts caution, however, that while economic and political uncertainty can drive prices higher, rapid rallies can also trigger sharp corrections when investor sentiment shifts or gains are viewed as excessive.
0 Comments