Precious metals experienced a dramatic plunge on Friday, with silver dropping 35% and gold falling 12% from recent highs. Bitcoin remained relatively stable around $83,000 amid the volatility. The sell-off appears linked to President Trump's nomination of Kevin Warsh as Federal Reserve chair.
The sharp decline in precious metals markets unfolded on Friday, capping a volatile week for financial assets. Silver, which reached a record $120 per ounce earlier in the session, retreated to $75, erasing nearly its entire January gain and marking a 35% drop for the day. Gold, which had climbed to $5,600 on Thursday—surpassing its previous unseen high of $5,000 per ounce as recently as Sunday—fell back to $4,718, down 12%. Other metals followed suit, with platinum declining 24% and palladium 20%.
This downturn in commodities has drawn comparisons to the extreme volatility seen during the Hunt Brothers' silver saga in 1980. U.S. equities also faced pressure, as the Nasdaq dropped 1.25% and the S&P 500 shed 0.9%. In contrast, cryptocurrencies showed resilience, with bitcoin trading sideways around $83,000 after dipping to $81,000 overnight.
The market turbulence is attributed to President Trump's selection of Kevin Warsh, a perceived hawkish figure, to succeed Jerome Powell as Federal Reserve chair. Paul Howard, director at trading firm Wincent, noted that the recent surge in commodities had diverted risk capital from crypto markets. "Cryptocurrency markets have been the victim of risk capital flowing into the still popular commodities trade," Howard said.
Signs of shifting sentiment emerged in options markets, where calls for bitcoin at $105,000 became among the most traded contracts for February. Howard suggested this reflects traders' anticipation of a catch-up rally in crypto. Regarding the nomination, he added, “What was meant to be a bullish move for the markets appears to have coincided with a broad risk sell-off.” He described the reaction as potentially knee-jerk, as markets adjust.
