Gold and silver wind down record-setting year on tumultuous note

Core Viewpoint - Gold and silver experienced significant volatility at the end of the year, with both metals reaching all-time highs before facing a sharp selloff driven by margin requirements and market speculation [1][3][17]. Price Movements - Gold prices fell over 4% on Monday to approximately $4,355 per ounce after peaking near $4,565 late last week, but rebounded to the $4,385 to $4,400 range on Tuesday [1][7][8]. - Silver saw even more drastic fluctuations, dropping nearly 9% on Monday to just above $73 per ounce after trading above $84 over the weekend, then surging up to 10% intraday on Tuesday [2][10][11]. Market Dynamics - The initial selloff was triggered by CME Group's decision to raise margin requirements on precious metals futures, leading to forced selling during a period of low liquidity [3][4]. - The volatility in the market is exacerbated by the thin trading environment typical of late December, where prices can swing dramatically on minimal conviction [7][16]. Speculative Behavior - The rapid price movements indicate a speculative environment, particularly for silver, which has outpaced gold significantly this year, with gains more than double those of gold at one point [11][16]. - Market participants noted that the rebound in prices suggests underlying demand remains strong, particularly from investors looking for entry points after the selloff [18]. Annual Performance - Despite recent volatility, both gold and silver are on track for their best annual gains since 1979, with silver up approximately 150% to 160% and gold up about 65% to 70% for the year [17].