Gold Sales Accelerate While Powell Maintains Aggressive Stance

Gold sales gained momentum this week as global investors readjust their portfolios in response to more hawkish signals from the Federal Reserve. Simultaneously, silver, crude oil, and industrial metals experienced significant declines, creating a widespread liquidation scenario in commodities that reflects a complete recalibration of market expectations regarding the trajectory of U.S. monetary policy.

Coordinated Collapse in Precious Metals Driven by Expectations of Prolonged Monetary Policy

Precious metals suffered a joint plunge alongside U.S. equities, a move that signals a fundamental shift in investors’ perception of Jerome Powell and his willingness to maintain a restrictive stance indefinitely. According to commodity strategist Vivek Dhar of CBA, as reported by Jin10, the market recently reinterpreted signals from the Federal Reserve chair as indicative of a more aggressive and sustained approach.

“What we observe is a deliberate repositioning where investors sell precious metals simultaneously with U.S. Treasuries, confirming that Powell is increasingly perceived as hawkish,” Dhar explained. This synchronization between the decline in precious metals and stocks suggests market participants are pricing in a longer and more challenging monetary cycle.

A Stronger Dollar Amplifies Pressure on Global Commodities

A critical component of this dynamic is the strengthening of the U.S. dollar, which exerts additional pressure on virtually all commodities, from base metals to energy derivatives. An appreciated dollar makes commodities more expensive for international buyers, reducing demand and accelerating the liquidation process already underway in gold and silver markets.

Asian stock markets followed this negative trajectory, with sharp declines in U.S. futures reverberating through global financial centers. This environment of widespread risk aversion was intensified by the recurring collapse in precious metals, creating a challenging context at the start of a week marked by corporate earnings, central bank decisions, and relevant economic data.

Tactical Adjustment or Structural Change? Vivek Dhar’s Analysis

Despite the volatility in the markets, Dhar warned against hasty interpretations. He carefully distinguished between a temporary correction and a potential fundamental decline in commodity prices: “The key question is whether this marks the beginning of a structural downturn in commodity prices or if it’s merely a short-term technical adjustment.”

CBA’s strategist offers a balanced perspective, characterizing the move as a tactical opportunity rather than a sign of underlying fundamentals disintegrating. “We interpret this movement as a beneficial adjustment and a strategic entry point for long-term buyers, not as a transformation in the foundations supporting prices,” Dhar stated.

Long-Term Optimistic Outlook for Gold Remains Intact

Notably, Dhar’s confidence in the long-term trajectory for gold remains unwavering despite current volatility. He reiterated his optimistic thesis, maintaining his projection that gold prices will reach $6,000 during the fourth quarter of this year. This forecast reflects a view that, despite short-term challenges related to U.S. monetary policy and dollar strength, the structural fundamentals for precious metals remain favorable.

The dichotomy between immediate volatility and medium-term prospects exemplifies the current complexity of commodity markets, where conflicting signals coexist: short-term political pressure versus long-term fundamental support. For attentive investors, periods of gold selling like this may present strategic repositioning opportunities before potential subsequent recoveries.