Gold and silver prices sold off sharply Friday after President Donald Trump named Kevin Warsh as his pick to succeed Jerome Powell as chair of the Federal Reserve, a move markets interpreted as supportive of central bank independence and a stronger U.S. dollar.
Precious metals have been among the best performing assets of the past year, driven by inflation fears, geopolitical risk, and concern that political pressure could weaken the Fed. Warsh’s nomination shifted that narrative almost overnight.
Precious Metals See Steep Losses
By early Friday morning, spot silver had fallen 10.6 percent to around $103.81 an ounce after plunging as much as 16 percent earlier in the session and briefly dropping below the psychologically important $100 level. Currently silver has slide over 30%.
Spot gold was down roughly 5.7 percent at $5,136.27 an ounce, after earlier losses that reached nearly 7 percent. Currently gold has lost over 10% today.
Futures markets reflected the same pressure. Front month gold contracts in New York fell 3.4 percent, while February silver futures slid about 10 percent.
The sell off spread across the broader precious metals complex. Platinum dropped more than 10 percent, while palladium declined close to 8 percent.
Markets React to Warsh Nomination
President Trump announced Kevin Warsh as his nominee to replace current Fed Chair Jerome Powell, a decision that surprised some investors who had expected National Economic Council Director Kevin Hassett to emerge as the frontrunner.
Warsh previously served as a Federal Reserve governor during the 2008 financial crisis and is widely viewed as a defender of institutional independence and monetary discipline.
In a note to clients, Evercore ISI analyst Krishna Guha said markets were reacting quickly to what they saw as a more hawkish shift in expectations.
“The Warsh pick should help stabilize the dollar some and reduce, though not eliminate, the asymmetric risk of deep extended dollar weakness by challenging debasement trades, which is also why gold and silver are sharply lower,” Guha said.
He cautioned, however, against assuming an overly aggressive policy pivot.
“But, we advise against overdoing the Warsh hawkish trade across asset markets and even see some risk of a whipsaw. We see Warsh as a pragmatist not an ideological hawk in the tradition of the independent conservative central banker.”
Fed Independence Was a Key Driver of the Rally
Much of the rally in gold and silver over the past year was fueled by fears that political pressure could undermine the Federal Reserve’s independence. That concern intensified as Trump publicly criticized Powell and floated unconventional policy ideas tied to growth and trade.
Claudio Wewel, FX strategist at J. Safra Sarasin Sustainable Asset Management, said geopolitical stress and Fed speculation combined to create what he described as a perfect storm for precious metals.
He pointed to rising global tensions, including the U.S. capture of Venezuelan President Nicolas Maduro and Washington’s threats involving Greenland and Iran, as key tailwinds for gold earlier in the year.
More recently, he said uncertainty around the next Fed chair had become a dominant factor.
“The market has clearly been pricing the risk of a much more dovish contender, that’s been largely helping the gold price along with other precious metal prices. Over the last 24 hours, the news flow has changed a little bit,” Wewel said prior to Trump’s announcement.
Record Rallies Meet Reality Check
Gold and silver delivered extraordinary gains in 2025, with gold up about 65 percent and silver soaring roughly 150 percent over the year. Those gains carried into early 2026, with silver up around 45 percent year to date and gold up roughly 19 percent before Friday’s sell off.
The abrupt reversal highlighted how crowded the trade had become.
Katy Stoves, investment manager at Mattioli Woods, described the move as a broader reassessment of positioning risk.
“Just as tech stocks, particularly AI related names, have dominated market attention and capital flows, gold has similarly seen intense positioning and crowding,” she said. “When everyone is leaning the same way, even good assets can sell off as positions get unwound.”
Mining Stocks and ETFs Feel the Pain
The metals downturn quickly spilled into equities tied to the sector.
In Europe, the Stoxx 600 Basic Resources index fell about 2 percent in afternoon trading. London listed Fresnillo, the world’s largest silver producer, dropped roughly 4 percent after earlier steeper losses.
In U.S. premarket trading, Endeavour Silver was down about 9 percent, while Coeur Mining lost around 8 percent.
Silver backed exchange traded funds were hit particularly hard. The ProShares Ultra Silver fund dropped more than 22 percent ahead of the opening bell, while the iShares Silver Trust ETF slid about 11 percent.
Dollar Stabilization Changes the Equation
Toni Meadows, head of investment at BRI Wealth Management, said gold’s surge past $5,000 an ounce had occurred with surprising ease, aided by a weakening dollar and aggressive central bank buying.
That support now appears to be fading.
“Central bank buying has driven the longer term rally but this has tailed off in recent months,” Meadows said. “The case for further reserve diversification is still there though as Trump’s trade policies and intervention in foreign affairs will make a lot of countries nervous about holding U.S. assets, especially those countries in the emerging markets or aligned to China or Russia. Silver will mirror the direction of gold, so it is not surprising to see falls there.”
What Investors Should Watch Next
For investors, the key takeaway is not that the long term case for gold and silver is broken, but that policy clarity changes risk premiums quickly.
A Fed chair perceived as independent and pragmatic reduces fears of currency debasement and runaway inflation. That supports the dollar and pressures metals in the short term.
Going forward, markets will be watching confirmation hearings, early policy signals from Warsh, and whether inflation data reaccelerates enough to revive safe haven demand. Volatility in precious metals may remain elevated as crowded positions continue to unwind.
For now, Friday’s sell off serves as a reminder that even the strongest trends can reverse sharply when the narrative shifts.
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