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Gold and silver prices suffered a dramatic selloff on Friday after President Donald Trump nominated former Federal Reserve Governor Kevin Warsh to replace Jerome Powell as Fed chair, easing fears about the central bank’s independence and triggering a sharp rebound in the U.S. dollar. The move sparked one of the steepest single-day declines ever seen in precious metals, abruptly ending a massive rally that had pushed prices to record highs earlier in the week.
By 16:16 ET, spot gold had plunged nearly 10% to around $4,850 per ounce, marking its worst daily performance since 1983. Gold futures also slid sharply, while silver prices collapsed more than 27%, logging their worst day on record as spot silver fell to near $84 per ounce. The selloff underscored how sensitive gold and silver markets have become to shifts in U.S. monetary policy expectations and Federal Reserve leadership.
According to José Torres, senior economist at Interactive Brokers, Warsh is widely viewed as a monetary policy hawk who favors higher real interest rates and a smaller Fed balance sheet. However, his recent alignment with Trump’s preference for lower borrowing costs may have helped secure his nomination. Markets interpreted the pick as a sign that the Fed could maintain credibility and resist excessive political pressure, strengthening the dollar and reducing the appeal of safe-haven assets like gold and silver.
The rally in the greenback reversed the so-called “Fed independence trade” that had fueled a surge in precious metals. Gold had briefly approached $5,600 per ounce and silver had neared $122 earlier in the week, driven by fears of political interference, a weaker dollar, and heightened geopolitical tensions. With those concerns easing, investors rushed to lock in profits, accelerating the downturn. Copper prices also retreated after recently hitting all-time highs.
Despite the brutal selloff, gold and silver remained firmly on track for strong monthly gains. Gold was still up about 12–15% for January, while silver led the metals complex with gains of nearly 18%. Ongoing global geopolitical risks, uncertainty over U.S. fiscal health, and fluctuating interest rate expectations continued to support precious metals demand, even as Friday’s events reminded investors just how volatile the gold and silver markets can be.
