Traders are still trying to grasp the significance of Friday’s historic move in the metals market after Kevin Warsh’s nomination to be the next Fed Chair.
The price action was so extreme that it exceeded 99.9996% of typical volatility observations — a very rare 6-sigma event.
Silver retested the $71.30 lows (!) after gapping down at the weekly open, but rebounded sharply to close the session up around 2%, near $80.
Gold, meanwhile, wicked down to $4,400 and remained relatively calm throughout the session.
Metals are unlikely to snap back immediately, but they are showing notable resilience following such a massive shock.
Stocks, on the other hand, have recovered all of Friday’s losses, supported by the fastest growth in US manufacturing since 2022 and dip-buying following weekend risk deleveraging, as the probability of Iran-US talks increased in an effort to ease mounting pressure.
Diplomacy remains a possible path forward, but the odds of reaching a consensus to avoid a full-blown conflict appear low.
US demands — including reducing enriched uranium and scaling back ballistic missile programs — have been described as unacceptable by Iranian advisers.
Oil has also given back a large portion of its Friday gains and is now retesting its upward trendline around $62 — a familiar pattern when geopolitical risk premiums fail to hold.
Meanwhile, a partial US government shutdown began over the weekend, leading to the postponement of Friday’s NFP release. Further details will follow once the BLS announces an updated schedule.