Editor’s Note
This article examines the sharp, sudden drop in gold and silver prices, linking the volatility to market reactions following a key Federal Reserve nomination.
After months of historic price increases that saw gold and silver reach over $5,600 and $121 respectively, prices for these precious metals recorded their largest intraday percentage declines in decades late last week. The drop occurred on January 30, shortly after President Donald Trump nominated Kevin Warsh as the next Federal Reserve Chair.
Warsh is viewed as a hawk on monetary policy, seen as less inclined toward interest rate cuts—which typically boost precious metal prices—and considered less likely to cut rates than other candidates. The dollar also rose on his nomination, acting as another downward pressure on precious metal prices.
Some analysts pointed out that the sharp decline was not solely due to Warsh’s nomination but also a reaction to prices having risen too far, too fast. John Stepek, a metals analyst at Bloomberg, stated that it was “only a matter of time before gold and silver hit a wall.” While gold and silver saw a temporary rebound early this week, Neil Wilson, an investor strategist at Saxo UK, explained that this was a new wave of buying from investors who “dipped a toe in the market to test the waters,” thinking “the worst of the volatility may be over.”
Precious metal prices recorded historic gains throughout 2025, with gold rising about 65% and silver surging 150%. Both metals continued their ascent in the first few weeks of January. Analysts cite heightened geopolitical risks—such as tensions between Venezuela, Iran, European nations, and the U.S.—alongside concerns over Fed independence, Trump tariffs, and interest rate cuts as background for this rally. Furthermore, surging demand for silver, deemed essential in technological fields like electric vehicles and AI, is also fueling its price increase.