Dollar's Surge and Easing Trade Tensions Impact Precious Metals Market

The precious metals market faced a sharp downturn on Thursday as gold and silver prices plummeted amid a broader selloff. This decline came as the dollar surged to a near two-week high, exacerbated by signs of easing trade tensions between the U.S. and China, adding pressure on gold and silver.

Market sentiment soured across most asset classes, creating a feedback loop that fed into the losses, especially as thin market liquidity persisted. The dollar's strength made dollar-priced gold more expensive for holders of other currencies, compounding the metals' decline.

The industrial demand for silver has particularly evaporated, with buyers and solar panel producers in China seeking alternatives. Meanwhile, geopolitical developments, such as U.S.-Iran talks and China's potential purchase of U.S. soybeans, painted a complex picture for market dynamics.