:max_bytes(150000):strip_icc()/GettyImages-2258271165-f182802b6a8c4968a4a4e557cb689245.jpg "Gold and Silver Prices Plunge from Record Highs—What Investors Need to Know")
:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-2258271165-f182802b6a8c4968a4a4e557cb689245.jpg)
Key Takeaways
- Investors locked in profits from a blistering precious metal rally on Friday after President Trump tapped Kevin Warsh, a former Fed Governor, to lead the central bank.
- Gold prices tumbled 10% from yesterday’s record high, while silver slid more than 25% to trade below $85 an ounce.
- Geopolitical uncertainty, concerns about the Federal Reserve’s independence, and a weakening dollar have helped make gold and silver two of the best-performing assets over the past year.
Gold and silver prices tumbled on Friday as investors locked in profits after President Trump nominated Kevin Warsh to chair the Federal Reserve, allaying some of Wall Street’s fears about the president’s efforts to exert greater control over the independent central bank.
Spot gold was recently down 10% at about $4,850 per troy ounce after hitting a record high of about $5,600 on Thursday. Silver prices, which touched an all-time high above $120 yesterday, dropped 28% to trade below $84 an ounce. Exchange traded funds tracking the precious metals, including the iShares Silver Trust (SLV) and SPDR Gold Shares (GLD), were suffering similar declines.
Gold and silver prices have soared over the past year, driven by geopolitical and economic uncertainty, as well as a weaker U.S. dollar. Heading into Friday’s session, gold prices were up nearly 90% in the preceding 12 months. Silver climbed about 250% in the same period.
Why This Is Important
Gold and silver prices skyrocketed over the past year as investors sought refuge from exceptionally volatile risk assets. Friday’s slump likely reflects investors’ expectations for smoother sailing ahead with Kevin Warsh at the helm of the Federal Reserve.
Investors breathed a sigh of relief on Friday when President Trump announced Kevin Warsh, a former Fed Governor, as his pick to replace current chair Jerome Powell, whose term is up in May. Warsh was one of the more establishment-friendly candidates being considered by Trump, who has spent the past year pressuring the Fed to aggressively lower interest rates despite elevated inflation and tariff uncertainty. Warsh’s nomination reassured investors concerned that a Trump loyalist leading the Fed would compromise the central bank’s independence, undermining the legitimacy of U.S. monetary policy.
Wall Street’s relief could be seen across asset classes on Friday. The 10-year Treasury yield ticked up to 4.25%, reflecting investors’ expectations that interest rate policy under Warsh won’t be as lax as the president would like.
The U.S. dollar index, which touched a 4-year low earlier this week, was recently up about 0.7%. The dollar’s weakness since Trump returned to office—the USD index is down more than 10% in the past year—has boosted foreign demand for metals priced in dollars, helping to fuel their rally.
Investors also locked in profits from run-ups in other precious metals. Palladium prices doubled in value in the year leading up to Friday, and were down about 15% in recent trading. Platinum slumped 20% after nearly tripling in value over the last year.
