Gold and silver prices plummeted sharply on Friday after President Donald Trump nominated Kevin Warsh as Chair of the Federal Reserve, a move seen as easing concerns about the independence of the central bank and pushing the USD to soar.

Spot silver fell about 28% to 83.45 USD/ounce, fluctuating near the day's lowest levels. Silver futures dropped 31.4% and closed at 78.53 USD, marking the deepest decline since March 1980.

Silver prices fell nearly 30% in one day

Meanwhile, spot gold has lost about 9%, retreating to 4,895.22 USD/ounce. Gold futures contracts fell 11.4%, closing at 4,745.10 USD.

Gold prices fell nearly 10% in one day

The initial sell-off stemmed from news about Warsh's nomination, then accelerated during afternoon trading in the U.S. as investors rushed to take profits after a strong influx of capital into precious metals. Precious metals also faced pressure as the USD surged, making gold and silver more expensive for international investors, while also weakening the argument that precious metals could replace the greenback as a global reserve. The USD index at one point rose about 0.8%.

Matt Maley, an equity strategist at Miller Tabak, noted that much of the decline could come from 'forced liquidation selling.' According to him, silver has recently been a favored asset among short-term traders, leading to high leverage use. As prices plummeted sharply, margin calls were triggered.

Previously, National Economic Council Director Kevin Hassett was considered a strong candidate to replace Jerome Powell, but Warsh has recently surged ahead in the prediction markets.

Expert Krishna Guha of Evercore ISI believes that the market is trading according to the Warsh scenario, which has a 'hawkish' stance. According to him, this choice could help stabilize the USD to some extent and reduce the risk of this currency weakening for an extended period — a factor that previously strongly supported gold and silver. However, Guha also warns against overreacting to the 'hawkish' scenario, as Warsh is seen as more pragmatic than a hardline ideological policymaker.

Claudio Wewel, a currency strategist at J. Safra Sarasin, stated that the rally of precious metals this year has been driven by a 'perfect storm' of geopolitical tensions and global instability. Recently, expectations about the successor to the Fed Chair position have also significantly influenced precious metal prices, as the market had previously priced in the possibility of a candidate with a more dovish stance.

After a boom in 2025 — with gold rising 66% and silver up to 135% — shares of silver mining companies and related ETFs also faced heavy pressure. Coeur Mining shares fell 17%. The ProShares Ultra Silver fund at one point lost over 62%, while the iShares Silver Trust dropped 31%, heading towards the deepest decline in history.

Katy Stoves, an investment manager at Mattioli Woods, believes that the market is reassessing concentrated portfolio risks. She compares the capital influx into gold to the trend focusing on tech stocks, particularly AI — when too many investors align on one side, even good assets can be sold off when cash flow reverses.

Toni Meadows, an investment director at BRI Wealth Management, commented that the rise of gold to nearly 5,000 USD has occurred 'too easily.' He believes that the stabilization of the USD has weakened the bullish momentum, although the trend of diversifying foreign exchange reserves among central banks remains, especially in the context of U.S. trade and foreign policies causing concern for many countries holding U.S. assets.

Alongside precious metals, the U.S. stock market also declined, with the Nasdaq down 1.25% and the S&P 500 down 0.9%. Meanwhile, cryptocurrencies experienced narrower fluctuations. Bitcoin traded around 84,000 USD, higher than the previous week's low of 81,000 USD.

Paul Howard, Director at Wincent Trading Company, believes that the recent hot rally of commodities has siphoned capital away from the digital asset market. However, this trend may be reversing as precious metals undergo significant corrections. He noted growing demand for Bitcoin call options expiring in February, particularly at a strike price of 105,000 USD, indicating that traders expect the crypto market may enter a 'catch-up' phase similar to commodities before.

Overall, what is hoped for is a positive signal from Warsh's appointment coinciding with a broad sell-off in risk markets, reflecting investors' somewhat 'knee-jerk' reactions as they recalibrate their monetary policy expectations.

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