Selling Pressure on Gold Rises as Powell's Aggressiveness in Commodity Markets Increases

The week began with turbulence in global markets. Investors expecting stability faced a different reality: signals that Jerome Powell would adopt a more aggressive stance at the Federal Reserve triggered a chain reaction. The result? A widespread decision to sell gold, silver, oil, and base metals alongside U.S. equities.

When Investors Decide to Sell Gold and Other Commodities

The sell-off was not isolated. According to strategist analyses, the gold sale occurred simultaneously with capital outflows from U.S. stocks. Vivek Dhar, commodities strategist at CBA, explained the phenomenon: the market interpreted Powell’s outlook as more restrictive and persistent, leading investors to reassess their positions in risk assets.

This combined movement signals a significant shift in risk perception. When the U.S. dollar strengthens—as it did in this context—pressures on commodities intensify. Precious metals, already suffering from widespread risk aversion, face a second wave of decline caused by the stronger currency.

Strong Dollar and Restrictive Policy Amplify Metal Market Sell-Off

Asian markets merely echoed what had already been happening: U.S. futures indicated a strong downward move. The week promises to be turbulent, filled with corporate earnings reports, central bank decisions, and crucial macroeconomic data. This combination amplifies uncertainty and heightens the risk-averse sentiment that drives investors to sell gold and other defensive assets to rebalance their portfolios.

However, Dhar offered a different perspective on the movement. Instead of interpreting the sell-off as a sign of structural change in commodity fundamentals, he sees it as an opportunity. “The key issue is distinguishing between a temporary adjustment and a decline in the market’s fundamentals,” the strategist stated.

Long-Term Outlook: Gold Continues on an Appreciation Trajectory

Despite recent volatility, Dhar maintains his long-term outlook intact. His projection for the fourth quarter remains ambitious: $6,000 per ounce of gold. This target reflects confidence that the current sell-off is merely a correction within a larger cycle, not a structural reversal in commodity markets. For investors with a long-term horizon, such movements historically represent attractive entry points, not signals to abandon positions in gold and precious metals.