Precious Metals Slide as Dollar Surges After Warsh Nomination Buzz
Markets | Precious Metals | U.S. Dollar
The sharp moves lower in precious metals were initially triggered by reports of Kevin Warsh’s nomination. The sell-off accelerated during afternoon U.S. trading as investors who had piled into metals rushed to book profits.
Gold and silver also came under pressure as the U.S. dollar spiked higher, making it more expensive for foreign investors to buy precious metals and undermining the theory that gold and silver could replace the greenback as the world’s reserve currency.
The U.S. dollar index last traded around 0.8% higher.
“This is getting crazy. Most of this is probably forced selling,” said Matt Maley, equity strategist at Miller Tabak. “There has been leverage built up in silver. With the huge decline today, the margin calls went out.”
Trump Picks Warsh
National Economic Council Director Kevin Hassett had been considered the favorite to replace Jerome Powell for some time, but Kevin Warsh became the front-runner in prediction markets in recent days.
In a note on Friday morning, Evercore ISI’s Krishna Guha said markets were “trading Warsh hawkish.”
“The Warsh pick should help stabilize the dollar and reduce the risk of extended dollar weakness — which is why gold and silver are sharply lower,” Guha said.
However, Guha warned against overdoing the hawkish trade, noting that Warsh should be viewed as a pragmatist rather than an ideological hawk.
Geopolitics and Fed Speculation
Claudio Wewel, FX strategist at J. Safra Sarasin Sustainable Asset Management, described a “perfect storm” of geopolitical tensions that had driven precious metals higher in 2025.
He cited the U.S. capture of Venezuelan President Nicolás Maduro and Washington’s threats of military action in Greenland and Iran as major contributors.
More recently, speculation around the next Federal Reserve chair has become a key driver of metals markets.
“The market has clearly been pricing the risk of a much more dovish contender. Over the last 24 hours, the news flow has changed,” Wewel said.
‘Even Good Assets Can Sell Off’
Gold and silver delivered record-breaking rallies in 2025, gaining 66% and 135%, respectively.
Mining stocks and ETFs suffered heavy losses, with Coeur Mining down 17%. Leveraged and physical silver ETFs posted their worst daily declines on record.
According to Katy Stoves of Mattioli Woods, the move reflects a broader reassessment of concentration risk.
“When everyone is leaning the same way, even good assets can sell off as positions get unwound.”
Meanwhile, Toni Meadows of BRI Wealth Management argued that gold’s rise toward the $5,000 level had happened “too easily,” noting that central bank buying has slowed and the dollar appears to be stabilizing.
Despite the pullback, analysts say the long-term case for reserve diversification remains intact — particularly as global tensions and U.S. trade policies continue to unsettle foreign governments.
