Market Reversal After Months of Gains
Precious metals experienced a dramatic sell-off following a key announcement from President Donald Trump. Gold and silver prices, which had been climbing to record levels amid economic uncertainty, inflation concerns, and questions about the U.S. dollar’s stability, plunged sharply on Friday. The drop erased billions of dollars in market value for these assets, catching many investors by surprise after a prolonged rally.
The catalyst was Trump’s confirmation of Kevin Warsh as his nominee to lead the Federal Reserve, succeeding Jerome Powell whose term ends in May 2026.
Warsh, a former Fed governor known for his free-market views and influence from economist Milton Friedman, is seen as an inflation hawk favoring tighter monetary policy.
This nomination strengthened the U.S. dollar to its highest level in months and shifted market expectations toward potentially higher interest rates.
Higher interest rates generally make non-yielding assets like gold and silver less attractive compared to interest-bearing investments, prompting investors to sell off positions. The announcement reshaped perceptions of future Fed policy, moving away from expectations of prolonged low borrowing costs that had supported the metals’ upward momentum.
Historic Scale of the Decline
The price movements were among the most severe in decades. Gold recorded its worst single-day sell-off since 2013, while silver posted its steepest one-day drop since 1980.
Reports from various sources described the combined losses across gold and silver markets as amounting to billions, with some international accounts estimating figures as high as $15 trillion wiped from the sector’s value in a 24-hour period—though these appear exaggerated relative to total market capitalization.
Investors who had turned to gold and silver as safe-haven hedges against inflation, trade tensions, and policy uncertainty faced significant reversals.
The rally in precious metals had been bolstered by factors including steady purchases from foreign central banks, such as China diversifying reserves away from the dollar amid geopolitical strains. The sudden shift highlighted the metals’ sensitivity to U.S. monetary policy signals.
Implications for Investors and Policy Outlook
The sell-off raised questions about ongoing volatility in precious metals markets as investors await further developments from the Trump administration and confirmation hearings for Warsh.
While the immediate reaction strengthened the dollar and pressured gold and silver, analysts note that longer-term demand drivers—such as central bank buying and global uncertainties—remain in place.
Some market observers view the drop as a correction after an extended “parabolic” run, suggesting prices could stabilize or rebound as the initial shock subsides. Others point to Warsh’s background as signaling a more disciplined approach to inflation control, which could influence broader economic conditions.
Trump’s selection of Warsh, described in some coverage as a “safe” or conventional pick compared to more unconventional alternatives, provided clarity that altered trading dynamics overnight.
