Gold prices plunged sharply on Monday, extending last week’s heavy losses as investors booked profits and reassessed the outlook for U.S. monetary policy following President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve Chairman.
The sell-off erased a significant portion of gold’s recent rally, which had been fueled by geopolitical tensions and haven demand.
📉 Gold and Precious Metals See Broad Sell-Off
Spot gold dropped as much as 5% to $4,586.16 per ounce, while April gold futures slipped 0.8% to $4,703.16 per ounce.
The yellow metal has now wiped out nearly 10% of its value in just two sessions, retreating sharply from its recent record high of nearly $5,600 per ounce.
Precious Metals Performance Snapshot
| Metal | Price Change |
|---|---|
| Gold (Spot) | -5.0% |
| Gold Futures (April) | -0.8% |
| Silver (Spot) | -7.5% |
| Platinum (Spot) | -3.8% |
| U.S. Dollar Index | +0.14% |
Silver was hit even harder, plunging 7.5% to $78.35 per ounce, while platinum slid 3.8% to $2,089.19 per ounce, highlighting broad weakness across the precious metals complex.
🏦 Why the Warsh Fed Nomination Shook Markets
The sharp fall came after President Trump nominated Kevin Warsh, a former Federal Reserve governor, to succeed Jerome Powell as Fed Chair when Powell’s term ends in May.
The announcement removed a major uncertainty for markets — and with it, a key pillar of gold’s safe-haven appeal.
Key Market Concerns Around Warsh:
- Seen as tough on inflation
- Skeptical of aggressive asset-buying programs
- Less likelihood of rapid monetary easing
- Potentially hawkish long-term stance
“Warsh is considered the toughest on inflation among the candidates, lessening the likelihood of dramatic easing,” ANZ analysts said, calling the move gold’s biggest slide in four decades.
💵 Stronger Dollar Adds Pressure
Following the nomination, the U.S. dollar rebounded from a four-year low, further weighing on gold and silver prices, as precious metals typically move inversely to the dollar.
Westpac analysts noted that while Warsh has sounded dovish recently, his past comments often emphasized inflation risks, unsettling markets that had been betting on aggressive rate cuts.
🌍 Geopolitical Tensions Ease, Reducing Haven Demand
Gold also lost support from the geopolitical front after reports suggested the U.S. and Iran are open to renewed nuclear talks.
According to Axios:
- Mediators are attempting to arrange talks in Turkey
- Trump said negotiations were “serious”
- Reduced immediate geopolitical risk dampened haven buying
This marked a shift after weeks of heightened Middle East tensions that had helped push gold to record highs.
📊 Despite Drop, Gold Still Up for January
Even after the sharp correction, gold still ended January up nearly 15%, marking one of its strongest monthly performances in decades.
Drivers Behind January’s Rally:
- Geopolitical uncertainty
- Dollar weakness
- Investor inflows into safe-haven assets
- Shifting U.S. monetary policy expectations
🔎 What Markets Are Watching Next
Investors now turn their attention to key U.S. economic data, especially:
- U.S. Nonfarm Payrolls (January) – due Friday
- Labor market strength could influence rate-cut expectations
- Further dollar movement may dictate near-term gold direction
🧠 Final Takeaway
Gold’s steep fall reflects a powerful shift in market sentiment following clarity on the Federal Reserve’s future leadership. While long-term uncertainty and inflation concerns still support gold’s broader outlook, short-term volatility is likely as investors recalibrate expectations around interest rates, the dollar, and global geopolitics.
