Gold’s 11% one‑day slide and silver’s 31% plunge are reshaping how investors view their traditional hedges
Gold’s fastest rally in years has flipped into one of its sharpest reversals just as markets brace for a potential shift at the US Federal Reserve.
According to Reuters, US President Donald Trump’s nomination of former Fed governor Kevin Warsh to replace Jerome Powell has forced investors to rethink the path for interest rates and the Fed’s independence.
At the same time, gold and silver have swung from record highs to double‑digit percentage losses in a matter of days, while highly valued tech and AI trades show signs of stress, reported by BNN Bloomberg.
Reuters said that US stocks fell on Friday as investors treated Warsh as a relatively hawkish choice, even though he has recently argued for lower interest rates than some other potential nominees.
Warsh, 55, has called for the Fed to scale back its role in the economy and rethink its monetary‑policy framework, and would take over when Powell’s term ends in May if the Senate confirms him.
BNN Bloomberg reported that markets “churned” on Friday as participants tried to assess what Warsh’s leadership would mean for rates and the Fed’s independence.
The outlet noted that Trump has repeatedly pushed for lower rates, which typically support growth but can fuel inflation, while markets have long assumed the Fed must operate at arm’s length from Washington to make unpopular decisions, such as keeping rates high enough to bring inflation back to 2 percent.
Bloomberg said Warsh’s nomination has broadened the debate beyond policy rates to the Fed’s roughly US$6.6tn balance sheet and its wider market footprint.
The outlet reported that Warsh, long seen as an inflation hawk, aligned himself with Trump in 2025 by publicly arguing for lower rates, even as Trump said he did not ask him to commit to cuts.
According to BNN Bloomberg, Macquarie strategist Thierry Wizman described Warsh as “not the Fed’s guy, he is Trump’s guy,” and said Warsh has “shadowed Trump on monetary policy almost every step of the way since 2009,” while adding that this does not necessarily mean imminent cuts, but could mean a faster move when conditions change.
Bloomberg quoted Francis Tan of Indosuez saying investors worry about “‘higher for longer’” rates yet also wonder whether Trump will “send more doves the market’s way via Warsh,” which is fuelling volatility across asset classes.
BNN Bloomberg reported that gold fell 11.4 percent on Friday to settle around US$4,745 per ounce after roughly doubling over the past 12 months.
The metal topped US$5,000 for the first time on Monday and briefly touched about US$5,600 on Thursday before reversing. Silver, which had also more than doubled over the year, plunged 31.4 percent on Friday.
Bloomberg said the sell‑off continued into Monday, with gold plunging as much as 8.1 percent intraday to briefly trade below US$4,500 and silver dropping as much as 15 percent, following what Bloomberg described as a record 26 percent slump the previous session.
According to BNN Bloomberg, investors had piled into precious metals as perceived safe havens amid concerns about a less independent Fed, stretched US equity valuations, tariff risks and heavy public debt.
Bloomberg added that buying from Chinese speculators added froth.
Bloomberg quoted Tim Waterer of KCM Trade saying “traders are unnerved by the market tumult witnessed on Friday in precious metals,” and that forced position closures after margin increases are “leading to the liquidation of other assets,” turning the gold and silver slump into a “domino effect” across markets.
BNN Bloomberg reported that the equity hit was immediate, with Newmont down 11.5 percent and Freeport‑McMoRan off 7.5 percent on Friday.
Reuters similarly said the S&P 500 Materials index fell 1.9 percent as gold and silver miners tumbled.
On Friday the Dow Jones Industrial Average fell 0.36 percent, the S&P 500 lost 0.43 percent and the Nasdaq Composite dropped 0.94 percent.
The small‑cap Russell 2000, which had recently been outperforming, fell 1.6 percent on the day but finished the month up more than 5 percent, compared with gains of 1.4 percent for the S&P 500, 0.9 percent for the Nasdaq and 1.7 percent for the Dow.
The Dow has now posted nine straight monthly gains, its longest winning streak since 2018.
At the stock level, Reuters said Apple recovered to close 0.4 percent higher after earnings and forecast March‑quarter revenue growth of up to 16 percent, while warning that rising memory‑chip prices are pressuring profitability.
Microsoft fell 0.7 percent Friday after a 10 percent drop Thursday — its worst day since March 2020 — when cloud revenue disappointed, and Meta slid 3 percent.
Tesla, which had fallen after its results, rose 3.3 percent Friday and delivered the biggest positive contribution to the S&P 500 after reports that SpaceX is exploring deals with Tesla and other Elon Musk companies.
Verizon jumped 11.8 percent after guiding annual profit and free cash flow above expectations and posting its strongest quarterly wireless subscriber additions in six years.
CNBC reported that more than 100 S&P 500 companies are due to report this week, including Amazon, Alphabet and Disney, and said Deutsche Bank strategists see earnings growth on track to be the strongest in four years despite some high‑profile post‑earnings sell‑offs.
The AI trade, in particular, faces renewed questions.
Taders focused on Nvidia after The Wall Street Journal reported the chipmaker’s plans to invest US$100bn in OpenAI had stalled, with executives expressing doubt.
Bloomberg later reported that Nvidia CEO Jensen Huang called the US$100bn figure “never a commitment” and said Nvidia would consider funding “one at a time.”
Gary Tan of Allspring Global Investments saying Huang’s comments “likely had a near‑term sentiment impact, particularly on AI‑exposed names that have rallied strongly,” and framed them as a profit‑taking catalyst as crowded trades unwind.
Concerns about stretched valuations and heavy AI spending drove MSCI’s Asian tech gauge to its steepest decline since November, while the MSCI All Country World Index fell 0.5 percent and South Korea’s Kospi — a key AI bellwether — dropped 4.8 percent.
BNN Bloomberg reported that the yield on the 10‑year US Treasury inched up to 4.25 percent from 4.24 percent, after touching near 4.28 percent before easing, with higher yields signalling weaker bond prices.
The outlet said hotter‑than‑expected wholesale inflation could push the Fed to keep rates steady for longer rather than resume cuts after easing late last year.
Reuters similarly reported that producer prices rose more than expected in December, suggesting inflation may pick up in the months ahead.
CNBC said bitcoin dropped below US$80,000 for the first time since April, trading near US$76,000 as investors pulled back from risk after the precious‑metals rout.
Bloomberg reported that bitcoin briefly fell below US$75,000 as the Bloomberg Dollar Spot Index extended gains following Warsh’s nomination, and noted that crude oil fell 6.9 percent even as attention stayed fixed on gold and silver.
