Gold and silver rose on Tuesday, rebounding from their steepest two-day drop in decades after Kevin Warsh was nominated as the next US Federal Reserve chair and a hike in CME margin requirements put the brakes on the metals' record rally.
Spot gold climbed 4.1% to $4,854.56 an ounce by 0623 GMT. On Monday, it had hit a low of $4,403.24 an ounce, two sessions after peaking at $5,594.82.
US gold futures for April delivery rose 4.8% to $4,838.10 per ounce.
"It's a reasonable call that this is somewhere around fair value potentially, if you consider that we saw a market behaving fairly irrationally for a few weeks there," said Kyle Rodda, a senior market analyst at Capital.com.
"The current prices take gold and silver back to where they were, early in the second half of January."
Gold's parabolic rise saw it smash multiple peaks and log a nearly 13% gain in January, its biggest monthly gain since November 2009, while silver touched an all-time high of $121.64 on Thursday.
Silver gained 6.2% to $84.34 an ounce on Tuesday, after posting its biggest one-day loss on record on Friday with a 27% slump. It fell by another 6% in the last session and hit a low of $71.33 an ounce. "The markets endorsed Warsh's nomination by US President Donald Trump as someone relatively credible, and so we saw the dollar move on that basis, and again, that was kind of like the pin that popped the big precious metals," Rodda said. CME Group also raised margin requirements on precious metal futures, fueling last week's sharp selloff that was triggered after Kevin Warsh's nomination to head the central bank. Despite the historic pullback in gold and silver prices, analysts see the metals' bull run continuing and expect it to notch fresh record highs later this year. Meanwhile, the US Bureau of Labor Statistics said on Monday the closely watched employment report for January would not be released this Friday because of a partial shutdown of the federal government.
In other metals, spot platinum climbed 2.9% to $2,183.38 per ounce after hitting a record high of $2,918.80 on January 26, while palladium was up 2.8% at $1,766.02.
