Gold and silver retreat from highs as investors lock in gains

(Bloomberg) Gold steadied after falling below $4,000 an ounce in the previous session, while silver extended losses as investors took profits following a rally that sent prices to the highest since 1980.

Bullion traded near $3,980 an ounce on Friday, after losing 1.6% in the previous session. Technical gauges show the precious metal has been in overbought territory for much of the past month, prompting some investors to lock in gains after a rapid four-day winning streak that pushed prices to a record high of $4,059.31 an ounce on Wednesday.

Silver also pulled back after touching $51.235 an ounce on Thursday—the highest in more than four decades. The metal is still up about 70% this year, easily outpacing gold’s advance. The rally is part of a broadening interest in precious metals, fueled by fears of an overheating equities market, fiscal pressures in the US and threats to the Federal Reserve’s independence.

The selloff coincided with Thursday’s slide in US equities. While gold is often viewed as a haven during market turmoil, it can drop alongside risk assets when investors liquidate positions to cover losses elsewhere. Nevertheless, bullion is still on track for an eighth weekly advance.

“Gold, silver, crypto, and much of the S&P 500 all moved as one through US trade—albeit with varied betas—as the technical picture showed evidence of the heat coming out of the move,” Chris Weston, head of research at Pepperstone Group Ltd., said in a note. “The strong momentum that had delivered new highs day after day gave way, with some traders keen to reduce exposure from extended positions and lock in performance.”

Precious metals have gained momentum as part of the so-called “debasement trade”, in which investors flock to the perceived safety of Bitcoin, gold and silver while pulling away from major currencies like the dollar. Concerns the value of financial securities will be eroded by inflation and unsustainable fiscal deficits is boosting their appeal.

Spot gold was steady at $3,987.04 an ounce at 7:47 a.m. in Singapore. The Bloomberg Dollar Spot Index was little changed, after rising to a 10-week high in the previous session. Silver was down 0.2%, after gaining as much as 4.8% on Thursday. Platinum and palladium advanced.

Silver often moves in tandem with gold, sharing its strong negative correlation with the US dollar and US interest rates. But the metal also has industrial applications in solar panels and wind turbines, which collectively account for more than half of all silver sold. Demand is set to exceed supply for the fifth consecutive year in 2025.

The silver market in London has now tightened to an almost unprecedented degree, resulting in sky-high borrowing costs. This year, fears that the US could levy tariffs on silver have spurred a dash to ship the metal to the US, drawing down inventories in London and reducing the amount of material available to borrow.