Financial markets worldwide confronted significant turbulence as precious metals suffered their steepest declines in recent memory, with gold falling 8% to $4,465 per ounce on Monday. The metal had reached nearly $5,600 just last week before beginning a sharp reversal. Silver’s situation proved even more dramatic, with a 7% Monday loss following Friday’s catastrophic 30% plunge, creating widespread concern about broader market stability.
President Trump’s Friday nomination of Kevin Warsh as the next Federal Reserve chair catalyzed the dramatic shift in market sentiment. Warsh, recognized for his previous service as a Fed governor and respected standing in central banking circles, represents a choice favoring institutional credibility over political loyalty. His expected succession of Jerome Powell in May, assuming Senate confirmation, has materially altered investor expectations about Fed policy independence.
The precious metals rally that preceded this correction was driven primarily by safe-haven demand stemming from geopolitical uncertainty and fears about potential Fed politicization. With Warsh’s nomination addressing the latter concern—particularly given Trump’s statement about not demanding rate cut commitments—investors began rapidly unwinding positions that had pushed metals to record highs. Michael Brown from Pepperstone characterized the selling as a complete meltdown in the metals space.
Commodity market weakness extended well beyond precious metals, with industrial metals experiencing severe declines. Platinum dropped 10% while copper fell 9%, indicating broad-based repositioning rather than isolated selling in specific markets. Stock exchanges absorbed the shock with losses, particularly among mining companies with precious metals exposure, while bitcoin and oil prices also retreated as risk appetite tentatively improved.
Despite the severity of recent declines, precious metals maintain substantial gains on a year-over-year basis, with gold up approximately 65% and silver soaring over 120%. Analysts suggest the correction primarily reflects elimination of speculative excess rather than fundamental deterioration, with positioning data showing crowded long positions have been substantially reduced. Some maintain optimistic longer-term forecasts despite near-term technical damage.