How to trade the market spiral as investors dump gold, silver and oil

Core Viewpoint - Precious metals and oil prices are experiencing significant losses, primarily triggered by U.S. President Trump's nomination of Kevin Warsh as the successor to Federal Reserve Chair Jerome Powell [1][11]. Precious Metals Market - Spot gold prices fell 3.2% to $4,713.39 per ounce, following a historic drop of over 9% on Friday, marking the sharpest one-day decline since 1983 [2]. - Spot silver prices decreased by 2.7% to $82.29 per ounce, having dropped over 31% on Friday, which is its worst daily performance since 1980 [2]. - Analysts suggest that the recent downturn in precious metals is part of a broader market decline, with the pan-European Stoxx 600 index reflecting losses from Asia-Pacific markets [3]. Investment Strategies - JPMorgan's global investment strategist, Grace Peters, emphasizes the importance of geopolitical hedges and safe-haven assets, asserting that gold remains the best geopolitical hedge [4]. - Peters maintains a forecast of $6,500 per ounce for gold by year-end, driven by factors such as central bank buying and institutional investor support [5]. - The current allocation of gold in institutional and retail portfolios is around 3%, indicating potential for increased investment in gold [8]. Market Sentiment and Future Outlook - The sell-off in precious metals began due to fears regarding the Federal Reserve's independence and expectations of a declining U.S. dollar [10]. - The nomination of Warsh has led to a reevaluation among investors, as he has advocated for reducing the Fed's balance sheet, creating uncertainty in the market [11][12]. - Some analysts view the recent sell-off as a "healthy correction," suggesting that prices may stabilize and recover in the coming months, with expectations of gold reaching $5,020 per ounce and silver at $88 per ounce by year-end [15][16]. Oil Market - Oil prices also declined, with Brent crude futures falling 5% to $65.88 per barrel and U.S. West Texas Intermediate futures down 5.3% to $61.76, marking the steepest single-session decline in over six months [18]. - The decline in oil prices is attributed to signals of de-escalation in U.S.-Iran tensions, as President Trump indicated that the two nations are "seriously talking" [17].