KEY POINTS
- Gold and silver prices fell sharply as the dollar posted its biggest daily gain since November.
- Markets interpreted Trump’s Fed chair pick as supportive of currency stability.
- Despite the drop, precious metals remain well above year ago levels.
Gold and silver prices plunged Friday after former President Donald Trump announced his choice for Federal Reserve chair, triggering a sharp rebound in the US dollar and prompting investors to unwind positions built during months of geopolitical tension and currency weakness.
The sudden decline in gold and silver prices reflected a rapid shift in market expectations around U.S. monetary policy and the dollar’s trajectory.
Investors reacted within hours of Trump’s announcement, highlighting how sensitive precious metals remain to perceived changes in Federal Reserve leadership and political influence over policy.
Spot silver dropped about thirty three percent to just over seventy seven dollars an ounce by Friday afternoon, while gold slid twelve percent to roughly four thousand seven hundred twenty two dollars.
Futures prices mirrored the move. One day earlier, gold had reached an all time high of five thousand five hundred ninety five dollars and forty six cents, and silver hit a record one hundred twenty one dollars and sixty seven cents.
The sell off followed months of gains driven by a weakening dollar, falling Treasury yields and heightened geopolitical risks, including tensions involving Iran and US actions in Latin America and the Arctic.
Gold is traditionally viewed as a hedge against currency depreciation and political uncertainty.
Krishna Guha, vice chairman at Evercore ISI, said Trump’s decision to nominate Kevin Warsh “should help stabilize the dollar” and reduce expectations of prolonged weakness, diminishing support for gold and silver prices.
The US dollar index rose zero point six percent Friday, its largest single day increase since November, according to ICE Data Indices.
| Indicator | Recent Peak | Friday Level |
|---|---|---|
| Gold price | $5,595.46 | ~$4,722 |
| Silver price | $121.67 | ~$77 |
| Dollar index | Four-year low | +0.6% daily |
Michael Reynolds, vice president of investment strategy at Glenmede, said the move showed how “crowded” precious metal trades had become. “When the policy narrative changes, the exit can be fast,” he said.
Deutsche Bank analyst Jim Reid noted earlier this week that gold could still test six thousand dollars if dollar weakness resumes.
Mark Kolanovic, former chief market strategist at JPMorgan Chase, wrote on X that silver faces downside risks in 2026 if growth slows and speculative demand fades.
While Friday’s drop underscored the volatility of gold and silver prices, both metals remain significantly higher than a year ago, reflecting lingering uncertainty over global politics, inflation and the long-term direction of US monetary policy.
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