Gold and silver prices continued to fall after a sharp reversal of a rally that had pushed both metals to record highs. Spot gold dropped nearly 10 percent at one point, while silver slumped as much as 15 percent before recovering some ground later in trading.
The metals had reached new peaks in January as investors sought “safe haven” assets amid geopolitical uncertainties and concerns about the independence of the US Federal Reserve. Prices fell sharply on Friday after President Donald Trump nominated Kevin Warsh, a former Federal Reserve governor, to lead the central bank.
The announcement sparked a 1 percent rise in the US dollar, prompting investors to reassess their positions in precious metals. Spot gold recorded its sharpest one-day decline since 1983, falling more than 9 percent, while silver dropped 27 percent. Deutsche Bank analysts said the nomination of Warsh appeared to be the main trigger for Friday’s sell-off. Changes to trading requirements for precious metals on major exchanges, which increased costs for speculators, also contributed to the decline.
After plunging in Asian trade on Monday, gold recovered to $4,750 an ounce, down nearly 3 percent on the day. Silver rebounded to $82 an ounce, a decline of 3.4 percent. Despite the losses, gold remains about 70 percent higher than its value at the same time last year.
The sell-off affected broader markets in Asia. South Korea’s Kospi index fell 5 percent, while Hong Kong’s Hang Seng dropped 3 percent and Japan’s Nikkei 225 lost over 1 percent. In Europe, the FTSE 100 initially declined but later recovered to a 0.5 percent gain by midday. Mining companies were under pressure, with gold miners Fresnillo and Endeavour Mining down between 2 and 3 percent.
Energy markets also saw declines, with crude oil falling nearly 5 percent. Analysts attributed the drop to an agreement by major oil producers to maintain output and signs of easing tensions between the US and Iran. A stronger US dollar also contributed, making oil more expensive for buyers outside the United States.
Gold and silver had a blockbuster 2025, with gold posting its largest annual gain since 1979. Gold reached over $5,500 an ounce in late January, while silver hit more than $120. Investors turned to precious metals amid concerns over US tariffs, geopolitical tensions, and potential overvaluation in AI-related stocks.
Wall Street analysts expect the Fed to cut interest rates at least twice in 2026, which could support gold as a low-yield asset. Mark Matthews, head of research for Asia at Bank Julius Baer, said recent declines were likely driven by profit-taking after prices had gone “parabolic” in the previous week. “Once profit taking started, it just snowballed,” he noted.
Gold remains attractive for its scarcity, with only about 216,265 tonnes ever mined, according to the World Gold Council. While economic uncertainty can drive prices higher, easing concerns and investor profit-taking can quickly reverse gains, as seen in the past few days.
