Gold, Silver plunge on Warsh fed pick, dollar surges

January 31, 2026 (MLN): Gold and silver prices collapsed logging one of their steepest single-day declines in decades.

The sell-off followed U.S. President Donald Trump’s nomination of Kevin Warsh as the next chair of the Federal Reserve, a move that eased concerns over central bank independence and sparked a sharp rally in the U.S. dollar.

Silver recorded some of the steepest losses, as Spot Silver fell 25.27% to $85.11 an ounce as of [1:09 PM] PST, according to data reported by Mettis Global.

Gold was also not spared from the rout, as Spot gold fell 8.12% to $4,884.23 an ounce as of [1:09 PM] PST, according to data reported by Mettis Global.

The market reaction began soon after headlines pointed to Warsh emerging as the preferred candidate for the Fed’s top job, but selling intensified later in the U.S. session.

Traders who had heavily bet on the metals during their historic rally moved quickly to lock in gains, accelerating the downward momentum.

A rapidly strengthening dollar added to the pressure.

Because bullion is priced in the U.S. currency, a stronger greenback raises costs for international buyers and often dampens demand.

The move also challenged the growing narrative that gold and silver could increasingly serve as alternatives to the dollar in the global financial system.

Until recently, National Economic Council Director Kevin Hassett had been widely viewed as the leading contender to replace Jerome Powell,  as reported by CNBC.

However, shifts in prediction markets suggested confidence was building around Warsh, with interpretation on the possible appointment as signaling a firmer stance on inflation.

Uncertainty surrounding the future leadership of the Federal Reserve has been a quiet but influential driver in commodities trading.

Both metals surged to extraordinary heights in 2025, with gold advancing roughly 66% and silver soaring about 135% amid geopolitical strains, financial market swings, and persistent concerns over central bank policy.

Notably, the sell-off comes just days after impressions that gold’s rally had entered a structural phase driven not only by central banks but increasingly by private investors seeking long-term protection against fiscal risks and macroeconomic uncertainty.

Goldman Sachs had recently lifted its price forecast to $5,400 per ounce by December 2026, citing strong ETF inflows, rising physical purchases from wealthy investors, and persistent reserve diversification by emerging economies  factors that emphasize how firmly bullish sentiment had been anchored before the sudden market reversal. 

The sudden reversal emphasizes how quickly sentiment can shift in commodities markets, where expectations around interest rates, currency movements and economic stability continue to dictate investor appetite for safe-haven assets.

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