Friday, the prices of gold and silver fell because President Trump nominated Kevin Warsh to be the next chair of the Federal Reserve. This seemed to calm worries about the independence of the central bank and send the dollar skyrocketing.
With an ounce of silver worth $83.45, it was down 28% from the day’s high. Silver prices fell 31.4% and ended the day at $78.53. This was the worst day for them since March 1980.
The sharp drops started when news came out that Warsh had been nominated. But in the afternoon U.S. trading, they picked up speed as buyers rushed to get their money out of the metals. As the dollar rose, prices for metals also went down. This made it more expensive for foreign buyers to buy gold and silver, which ruined the idea that metals would take the place of the dollar as the world’s reserve currency.
The dollar index went up about 0.8% in the last trade.
A stock analyst at Miller Tabak, Matt Maley, said, “This is getting crazy.” “I think most of this is “forced selling.” For day traders and other short-term traders, this is the best product to buy right now. This means that silver has gained some value. The margin calls went out because of the big drop today.
Trump chooses Warsh
Kevin Hassett, who is the director of the National Economic Council, had been the favourite to replace Powell for a while, but Warsh has recently become the clear favourite.
Krishna Guha of Evercore ISI wrote in a note on Friday morning that the market was “trading Warsh hawkish.”
The firm’s vice chairman said, “The Warsh pick should help stabilise the dollar some and reduce (though not eliminate) the asymmetric risk of deep extended dollar weakness by challenging debasement trades. This is also why gold and silver are sharply lower.”
“But we warn against taking too much of a Warsh-hawkish stance in the asset markets, and we even see a risk of a whipsaw.” While Warsh may not be an ideological hawk like some independent conservative central bankers, we see him as a practical person.
Claudio Wewel, an FX strategist at J. Safra Sarasin Sustainable Asset Management, told CNBC’s “Squawk Box Europe” on Friday that the increase in geopolitical tensions this year was due to a “perfect storm.” He cited the U.S.’s capture of Venezuelan President Nicolás Maduro and its threats to use military force in Greenland and Iran.
In recent months, he said, metals markets had been affected by rumours about who would be chosen as the next FED chair.
“It’s clear that the market has been pricing in the risk of a much more dovish candidate, which has helped the price of gold and other precious metals.” “The flow of news has changed a bit in the last 24 hours,” Wewel said before Trump’s speech.
“Even good things can be sold off.”
This year, 2025, both gold and silver had record-breaking rises. Gold went up 66% and silver went up 135%.
They lost 17% at Coeur Mining. Silver exchange-traded funds (ETFs) were also hit hard. The ProShares Ultra Silver fund was last seen down more than 62%. The iShares Silver Trust ETF went down 31%. It looked like both funds were about to have their worst days ever.
In the past year, precious metals have been on a great rally, even though the market as a whole has been very unstable and the U.S. dollar has been falling. There have also been rising global tensions and worries about the Federal Reserve’s independence.
Katy Stoves, an investment manager at the British wealth management company Mattioli Woods, told CNBC on Friday morning that the changes were probably “a reassessment of concentration risk across the whole market.”
“Kind of like how tech stocks, especially names related to AI, have dominated market attention and capital flows, gold has seen a lot of positioning and crowding,” she said. When everyone is on the same side, even good assets can lose value as bets are closed. The similarity isn’t a coincidence; both are places where a lot of money has come in because of strong stories, and positions of power will eventually have to answer for their actions.
At the same time, Toni Meadows, who is in charge of investments at BRI Wealth Management, said that gold’s rise to $5,000 was “too easy.” He said that the unwinding of the dollar had helped gold prices, but that the dollar seemed to have stabilised.
This long-term rise was caused by central banks buying, but it has slowed down in recent months, he said. A lot of countries will be wary of holding U.S. assets because of Trump’s trade policies and meddling in other countries’ affairs. This is especially true for developing markets countries and countries that are close to China or Russia. Since silver will move in the same way as gold, it is not a surprise that prices will drop there.
