Precious metals see sharp reversal
Gold and silver prices have fallen sharply following a dramatic reversal of a rally that had pushed the metals to record highs. Spot gold dropped nearly 10% at one point, while silver slumped 15%, before both partially recovered.
The recent rally had been driven by investors seeking “safe haven” assets amid geopolitical uncertainties and concerns over the independence of the US Federal Reserve.
Fed chair nomination triggers sell-off
Markets reacted strongly after President Donald Trump nominated Kevin Warsh, a former Federal Reserve governor, as the next Fed chair. The announcement triggered a 1% rise in the US dollar and a dramatic sell-off in precious metals.
After plunging in Asian trade on Monday, gold recovered to $4,750 an ounce, down nearly 3% on the day. Silver rebounded to $82 an ounce, a fall of 3.4%. Analysts at Deutsche Bank said the main catalyst for Friday’s sell-off “appeared to be news that Kevin Warsh had secured the nomination for Fed chair.”
Changes to trading requirements for precious metals on a major exchange, which increased costs for speculators, were also cited as a contributing factor.
Markets and commodities react globally
The fall in gold and silver added to broader declines in commodities and stock markets. Asian stocks were lower, with South Korea’s Kospi falling 5%, Hong Kong’s Hang Seng down 3%, and Japan’s Nikkei 225 more than 1% lower.
In Europe, the FTSE 100 initially fell but recovered to a 0.5% gain by midday. Mining companies were under pressure, with gold producers Fresnillo and Endeavour Mining down 2-3%. Global oil prices also fell nearly 5%, influenced by production decisions from major oil producers, signs of easing US–Iran tensions, and a stronger US dollar.
Gold remains historically strong
Despite the sharp declines, gold remains about 70% higher than at the same point last year. Precious metals had a blockbuster 2025, with gold posting its largest annual gain since 1979. Gold peaked above $5,500 at the end of January, while silver reached an all-time high of more than $120.
Wall Street analysts expect the Federal Reserve to cut interest rates at least twice in 2026, which could support gold prices. Scarcity remains a key factor: only around 216,265 tonnes of gold have ever been mined, according to the World Gold Council.
Profit-taking drives recent falls
Mark Matthews, head of research for Asia at Bank Julius Baer, told Reuters that recent drops were likely due to “profit taking after prices had gone parabolic in the previous week. Once profit taking started, it just snowballed.”
The gold rally had been boosted over recent years by central banks increasing bullion purchases and by investor concerns over tariffs and geopolitical risks. While these factors had driven prices higher, easing concerns and market corrections can quickly reverse gains.
Also read: How can thousands of households remain trapped in poverty despite the numbers?
For more videos and updates, check out our YouTube channel
