Monday Asian market trading was quite intense. Spot gold truly broke through this time, first surpassing the $4,600 mark, rising $280 since the beginning of the year. Spot silver was even more explosive, breaking through $83.9/oz during the session, not only hitting a new high from two weeks ago but also setting a record high, with a single-day increase approaching 5%.

The driving forces behind this are quite clear. Last Friday’s US non-farm payroll data fell short of expectations, and the market generally interpreted this as the Federal Reserve having room for further rate cuts, which is obviously positive for precious metals. Additionally, tensions in Iran have escalated, increasing geopolitical risks and boosting safe-haven sentiment. Moreover, Fed Chair Powell was served a subpoena by a grand jury from the Department of Justice regarding testimony related to the June last year Fed headquarters renovation, threatening criminal charges. As a result, the US dollar weakened somewhat in Asian markets. Furthermore, the US Supreme Court has yet to make a decision on Trump’s tariffs issue, with a new ruling expected on Wednesday. If the ruling is unfavorable to him, it would be the biggest legal setback since his return to the White House.

A detail worth noting is that gold and silver are particularly sensitive to the annual commodity index rebalancing. Major indices like the Bloomberg Commodity Index (BCOM) and the S&P Goldman Sachs Commodity Index are estimated to need to sell about $5 billion worth of gold and silver to rebalance their weights. The good news is that this rebalancing is scheduled to be completed this week. Although there may be some downward pressure, many analysts believe the fundamentals supporting these precious metals remain relatively solid. Their strategy from last year still makes sense now — buying on dips probably won’t have to wait too long.