Yesterday, the international gold and silver markets experienced an epic 'plunge', with gold recording its largest single-day drop in nearly 40 years, while silver set a record for the largest intraday drop in history.$XAG
Here are several key reasons that triggered this gold and silver crash:
1. The Fed nominee triggers a 'hawkish turn'
This is the most direct catalyst for the crash. U.S. President Trump nominated **Kevin Warsh** to be the next Chairman of the Federal Reserve. Warsh is historically known for his 'hawkish' stance, advocating for a reduction of the Fed's balance sheet and opposing overly loose monetary policy. This news shattered the market's original expectations for continued rate cuts in the future, leading to:
The US dollar index rebounded strongly, putting pressure on gold and silver as dollar-denominated assets.
Safe-haven funds are flowing back, and the positions in precious metals that were held due to concerns over inflation and loose policies have been rapidly liquidated.
2. Profit-taking after the crazy surge
Before this crash, gold and silver had already experienced an irrational 'straight-line surge' in January 2026:
Gold prices surged from $4000 at the beginning of the month to over $5600/ounce, an increase of more than 30%.
Silver pricesoared from $70 to over $120/ounce, an astonishing short-term increase.
Due to the massive profit-taking accumulated in the short term, market sentiment is extremely sensitive. Once a negative signal appears, investors will engage in 'panic' selling to lock in profits.
3. The chain reaction of global asset sell-off
Tech stocks plummet: Influenced by profit concerns arising from large expenditures in earnings reports from AI giants like Microsoft, US tech stocks experienced a wave of sell-off. Some investors were forced to sell liquid gold and silver to cash in to offset losses in the stock market or other leveraged trades.
Leveraged funds panic: As prices fall, stop-loss orders in the futures market were triggered on a large scale, and exchanges raising margin ratios further exacerbated the exit of high-leverage funds.
4. Inflation data and geopolitical situation cooling
Inflation pressure continues: The Producer Price Index (PPI) released on the 30th was higher than expected, and the market realizes that the Federal Reserve may need to maintain high interest rates for a longer period.
Geopolitical premium cooling: The marginal easing of tensions in some regions has led to a decline in the 'safe-haven premium' that originally supported high gold prices.
The key point for the rebound in gold and silver prices lies in Kevin Warsh completely obeying Trump to continue significantly lowering interest rates, shattering hawkish expectations.
At the same time, there is reason to believe that Trump will not choose someone who does not listen to him as the Federal Reserve Chairman.
