Gold and silver prices witnessed a steep sell-off as markets reacted to growing speculation that Kevin Warsh could be selected by Donald Trump as the next chair of the US Federal Reserve, according to market analysts. The prospect of a policy shift under a Fed leadership seen as less supportive of ultra-loose monetary conditions added fresh pressure to precious metals already vulnerable after a record rally.
Analysts at Maybank said gold and silver were pulling back on rumours of Warsh’s potential appointment, noting that he has been a long-time critic of easy monetary policy. Markets began pricing in how such a leadership change could influence the future path of interest rates, contributing to a sharp reversal in sentiment across precious metals.
The sell-off was amplified by extreme positioning. Gold had become one of the most crowded trades of the year, driven by safe-haven demand, scepticism around fiat currencies, and strong momentum buying. Once prices started falling, stop-losses were triggered and leveraged positions were forced to unwind, accelerating losses. Gold dropped sharply from recent peaks, with estimates suggesting around $3.5 trillion in market value was wiped out within hours, underscoring how quickly volatility can expand after parabolic moves.
Silver followed the decline, reinforcing its tendency to behave like a high-beta asset during rapid sentiment shifts. While prices showed some stabilisation in early trading, volatility remained elevated, reflecting ongoing uncertainty and fragile positioning.
Overall, the sharp correction highlights how large gains often come with equally large swings. With precious metals having surged aggressively in recent months, the current pullback appears to be a phase of leverage cleanup and repricing, as markets reassess policy expectations and risk appetite after an overheated run.
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