Editor’s Note
This article examines the sharp reversal in precious metals markets, linking the sell-off to speculation about Kevin Warsh’s potential nomination as Federal Reserve Chair. It highlights how political and central banking developments can trigger immediate volatility in global commodities.
A major reversal was witnessed in global commodity markets on Friday. Precious metal prices, which had been soaring for several weeks, recorded a sharp decline. On India’s Multi Commodity Exchange (MCX), silver rates fell to around ₹3.80 lakh per kilogram, while gold prices saw a significant drop of 4%. The main reason for this decline is the buzz surrounding the name of Kevin Warsh as the next head of the US Federal Reserve.
The immediate trigger for this sell-off in the market is the buzz about President Donald Trump announcing the nomination for the new chair of the Federal Reserve. According to reports, former Fed Governor Kevin Warsh could replace Jerome Powell.
Warsh is considered “hawkish” in the market, meaning he has been a proponent of raising interest rates to control inflation. In contrast, gold investors prefer a “dovish” stance or lower interest rates.
Despite Friday’s volatility, January 2026 has been historic for gold. At the start of the week, spot gold reached a high of $5,594.82 per ounce. By Friday morning, it had fallen to $5,183.21.
Speaking about gold trends in India, Jatin Trivedi, Research Analyst at LKP Securities, explained:
According to Trivedi, technically, ₹1,70,000 per 10 grams is now acting as a strong support zone, while ₹1,85,000 is the next resistance level.
The decline in silver was even steeper. Prices on MCX slipped towards ₹3,80,000 per kilogram. Spot silver, which touched a record high of $121.64 on Thursday, fell nearly 6% to around $109.55.
Jigar Trivedi, Senior Research Analyst at Indsec Securities, said:
Nevertheless, silver is on track to gain over 50% in January, marking its best monthly performance ever.
To understand Friday’s decline, it is essential to know the reasons behind the unprecedented rally in January 2026:
Geopolitical Tensions: Global conflicts and trade tariffs from the US administration pushed investors towards gold and silver.
Dollar Weakness: Changing policies in Washington and President Trump’s indifferent attitude towards dollar weakness initially supported precious metals.
Industrial Demand: Record demand for silver in the solar energy and electronics sectors fueled its prices.
The market’s focus is now on the official announcement from the White House. Analysts suggest that if Kevin Warsh is indeed nominated and his stance leans towards aggressive interest rate hikes, the current decline could deepen further. However, if geopolitical tensions escalate, safe-haven demand could support prices again.