Prices for gold, silver, and other precious metals plunged Monday as fears of a U.S. recession ignited a global market sell-off that tanked stocks and prompted criticism from analysts that the Fed waited too long to cut interest rates.
Gold lost more than 2% at one point early Monday before paring some of its losses to trade at $2,406 per ounce, down $34.78. Silver shed more than 4% and was struggling to remain above $27 per ounce, while platinum and palladium fell by 4% and 3%, respectively. The JM Bullion Fear and Greed Index for gold was neutral at 51.
Recession fears sparked by Friday’s shock U.S. jobs report sent markets into freefall. The Dow Jones Industrial Average was down more than 1,200 points earlier – including massive losses that wiped out nearly $900 billion in combined market value from blue chips like Apple, Nvidia, Meta Platforms, and Microsoft.
The bloodbath crossed continents, as Japan’s Nikkei 225 posted a 12% loss to record its worst day since the Black Monday crash on Wall Street in 1987.
Losses for gold and silver were blunted by Monday’s relatively solid S&P Global U.S. Services PMI business activity index that showed an increase in both new orders and employment, as well as continued turmoil in the Middle East that threatened to expand the Israeli-Palestinian conflict into neighboring countries.
The rapid deterioration of the economy prompted calls from some Wall Street analysts and business leaders for the Fed to intervene to minimize some of the damage. Policymakers unanimously decided last week to keep the benchmark interest rate unchanged at 5.25%-5.5%, although Federal Reserve Chairman Jerome Powell said a reduction could be “on the table” in September if market conditions held.
“The Fed funds rate right now should be somewhere between 3.5% and 4%,” said Jeremey Siegel, professor emeritus of finance at the University of Pennsylvania’s Wharton School.
In an interview Monday morning with CNBC, Siegel called on the Fed to make an emergency 75 basis-point cut ahead of the Federal Open Market Committee meeting next month, then another 75 basis-point cut at the Sept. 18 meeting.