Gold and silver prices tumbled sharply overnight after reports emerged that Russia is considering a return to the US dollar as part of a broader economic partnership.
According to reports, the proposal could involve Russia pivoting back toward the US dollar settlement system in exchange for closer economic cooperation with the United States.
Markets reacted swiftly.
Silver prices fell nearly 10% in around 30 minutes, dropping back below US$76 per ounce. Gold also slid heavily, shedding roughly 3.5% in 15 minutes and falling back under US$5,000 per ounce.
Across global markets, as much as US$3.2 trillion in value was wiped out within an hour as investors rapidly repositioned portfolios.
What is being proposed?
While details remain limited, the suggested framework includes:
- Cooperation between the US and Russia on fossil fuel production
- Joint investment in natural gas infrastructure
- Partnerships in offshore oil and critical raw materials
- Preferential treatment for US commercial interests
- Russia’s return to US dollar-based trade settlement
In simple terms, the proposal centres on Russia moving away from efforts to reduce reliance on the US dollar and instead re-engaging with the American financial system.
That potential shift is what appears to have rattled precious metals markets.
Why would this hit gold and silver?
Gold and silver are often viewed as hedges against uncertainty.
Investors typically buy precious metals when they are worried about geopolitical instability, currency debasement, or fractures in the global financial system. In recent years, one of the dominant narratives has been “de-dollarisation” â the idea that major economies, including Russia and members of the BRICS bloc, were gradually shifting away from the US dollar in trade and reserves.
That narrative has helped underpin demand for gold in particular, as central banks increased bullion purchases and investors sought alternatives to the US dollar.
If Russia were to pivot back to the US dollar system, it would signal a potential reversal of that trend.
In that scenario, fears of a fragmented global currency system may ease. A stronger US dollar outlook can also weigh on gold and silver prices, as both metals are priced in US dollars and tend to move inversely to it.
In short, if confidence in the US dollar rises, the immediate need for alternative stores of value can diminish. That dynamic helps explain the sharp and rapid selling in precious metals following the reports.
A market moving in real time
The speed of the move highlights how sensitive markets are to shifts in global power structures and currency alliances.
Gold falling more than 3% in minutes and silver plunging close to 10% in half an hour underscores just how crowded some of these thematic trades may have become.
For now, what we have are reports of discussions and a potential framework. No formal agreement has been announced.
But the reaction shows that sentiment weighs heavily towards any signs that the global financial architecture could be shifting again.
Whether this proposal advances or fades, the world will be watching closely. The implications stretch far beyond gold and silver prices and into energy markets, currency dynamics, and the broader balance of economic power.
The post Why did the silver and gold price just fall so sharply? appeared first on The Motley Fool Australia.
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