Gold, silver and copper prices fell sharply on Friday, after reaching historic highs more early in the week. Investors, becoming more cautious, sought to cash out their gains while hopes of aggressive rate cuts American interests are fading and the dollar is showing signs of stabilization.

The movement was accentuated by the announcement of US President Donald Trump, who confirmed on Friday the nomination of former Federal Reserve Governor Kevin Warsh at the head of the Fed. In the process, the dollar index, which measures the performance of the greenback Faced with a basket of currencies, strengthened, fuelled by expectations a less accommodative monetary policy.

“The market thinks Kevin Warsh is rational and that it will not push for aggressive rate cuts,” explains Tom Price, analyst at Panmur Liberum. “General investors, anxious to protect their capital, take their profits after the rally”, he adds.

A stronger dollar actually makes more expensive U.S.-denominated metals for buyers using other currencies, which can dampen demand. This correlation is closely followed by funds using quantitative models for trigger their buying or selling decisions.

After a surge of 17% for gold and 39% for money since the beginning of January, profit-taking at the end of the month intensified in a context of reduced liquidity, where modest speculative flows have amplified market movements. “Gold and The money was ripe for a correction, considering the very nature speculative and irrational about the recent outbreak,” believes Ole Hansen, head of commodity strategy at Saxo Bank.

Around 12:01 GMT, gold fell by 4.7% to 5 $143.40 per ounce, while silver plunged 11% to $103.40, after peaking at $5,594.80 and $121.60 respectively Watch. “Precious metals have regained gravity,” commented the analyst Independent Ross Norman, recalling that “these markets work in both meaning”.

Copper also retreated, after registered an all-time record at 14,527.50 dollars per ton on Thursday. The red metal fell 1.1% to $13,465, while still posting a gain of around 6% since the beginning of the month, after an increase of 11% in December. “Prices are expected to remain high and highly volatile as long as funds continue to flock to this relatively narrow and now overcrowded market,” warned Alice Fox, analyst at Macquarie.

Operators also anticipate new downward pressures on copper, aluminum and other metals manufacturers before the Lunar New Year holidays on February 16. During this period, China, the world's largest consumer of metals, will close for a week. “Chinese investors will avoid taking positions in these very volatile markets”, estimated Tom Price, stressing the speed and the extent of the movements observed in the space of a few hours.