Gold, Silver Suffer Historic One-Day Plunge After Trump Picks Kevin Warsh for Fed Chief

Gold and silver prices tumbled sharply on Friday, marking one of the most dramatic selloffs in precious metals in decades, after U.S. President Donald Trump announced former Federal Reserve Governor Kevin Warsh as his choice to lead the U.S. central bank.

By 1:57 p.m. ET, spot gold had fallen 9.5 percent to $4,883.62 per ounce, retreating steeply from its record high of $5,594.82 reached just a day earlier. Silver saw an even more severe drop, collapsing 27.7 percent to $83.99, putting it on track for its largest single-day fall on record. Platinum slid around 19 percent, while palladium dropped nearly 16 percent. U.S. gold futures closed 11.4 percent lower.

The selloff coincided with a strengthening U.S. dollar, with the dollar index gaining 0.7 percent, further pressuring dollar-denominated commodities.

Analysts attributed the sharp decline largely to profit-taking following an exceptionally volatile rally. Standard Chartered analyst Suki Cooper said the drop reflected investors locking in gains as the dollar and inflation-adjusted bond yields, known as real yields, moved higher. Nicky Shiels, strategist at MKS PAMP, described January as “the most volatile month in precious metals history,” noting potential technical support near $4,600 for gold and $80 for silver.

The plunge follows a frenetic month that attracted momentum traders and drew in even cautious investors, pushing prices to historic highs. Such rapid reversals can quickly erase leveraged positions and significantly alter market sentiment as we head into February.

Gold, which does not offer interest income, typically comes under pressure when real yields rise or the U.S. dollar strengthens. That dynamic was evident on Friday, as the dollar’s rebound weighed heavily on bullion prices.

Market uncertainty has been amplified by the nomination of Kevin Warsh, a former Fed governor known for his criticism of the central bank. If confirmed by the Senate, Warsh is expected to assume the role in May. Traders are now reassessing expectations for the pace of interest-rate cuts and the potential influence of the White House on monetary policy.

The day’s move resembled a sharp correction rather than a gradual decline. Silver, in particular, experienced extreme volatility, plunging after touching $121.64 a day earlier before staging a partial rebound.

According to the Financial Times, shares of precious-metal mining companies fell in tandem with bullion prices. Meanwhile, the Shanghai Futures Exchange reportedly froze several trading accounts in an effort to curb speculation following the recent surge and pullback. Ireland’s RTE noted that despite Friday’s drop, gold remains on course for its strongest monthly performance since 1982.

Looking ahead, analysts caution that the path for precious metals remains uncertain. Senate confirmation of Warsh, upcoming inflation data, dollar movements, and crowded speculative positions could continue to drive sharp price swings. If the dollar strengthens further and real yields rise, downside levels flagged by analysts may be tested sooner than expected.

For now, the sudden plunge serves as a stark reminder of how quickly sentiment can turn in commodity markets, and that January’s extraordinary rally came with significant risks.

In the global market today, gold stands at USD 4,891.40 per ounce, while silver is trading at USD 85.40 per ounce.