On Friday, gold and silver futures plunged after President Trump nominated Kevin Warsh to lead the Federal Reserve, a move markets saw as hawkish. The nomination strengthened the dollar and helped trigger a sharp precious metals selloff.
Gold fell 9 percent in its worst single-day drop in over a decade. Silver plunged about 26 percent, marking a record single-day decline.
Losses accelerated into Monday, with gold sliding another 6 percent to $4,538 per ounce. Silver then dropped a further 12 percent to $74.36 per ounce amid frantic selling.
Buying from Chinese speculators had driven prices to extreme highs days earlier, then unwound rapidly. Dominik Sperzel of Heraeus Precious Metals said “In my career it’s definitely the wildest that I have seen. Gold, it’s a symbol of stability, but such a move is not a symbol of stability.”
Shanghai silver futures experienced extreme swings as exchange daily limits forced prices to catch up with global moves. Daily limits of 16 to 19 percent amplified the volatility (Ed. note: daily price limits amplified volatility).
Observers blamed momentum trading for the runaway rally and the rapid reversal. Jay Hatfield of Infrastructure Capital Advisors said “We had identified about three or four weeks ago that it turned into a momentum trade, not a fundamental trade.”
Alexander Campbell, formerly head of commodities at Bridgewater Associates, blamed Chinese selling and stated “China sold and now we’re suffering the consequences.” Nicky Shiels of MKS PAMP SA added “January 2026 would go down as the most volatile month in precious metals history.”
José Torres at Interactive Brokers said the nomination revived a domestic buying push and noted “The ‘Buy America’ trade is back as a result, and the independence bid that drove gold and silver to nosebleed record heights right below $5,600 and $122 per ounce early Thursday morning is unraveling.” Despite the selloff, silver remains about 16 percent higher year-to-date and gold about 8 percent.
