It started like Hitchcock's earthquake with an earthquake, and then there were even greater emotions. Gold fell to $4,425 on Monday morning. per ounce, which is the lowest level since January 8. It was over 7 percent lower than on Friday, which heralded a continuation of the sharp decline from Friday (-11.1%). But what about gold?
Silver dropped by as much as 9.3%. to $71.20, after Friday's drop by as much as 31.4%. And recently, on January 29, it exceeded $121, setting a historical record. It was going to be a disaster and a continuation of Friday's trend of large declines. Investors clearly became eager to sell and take profits, and many “stop loss” orders were probably placed, only accelerating the sell-off.
However, it only took a few hours for the market to change 180 degrees. How else can we talk about a situation when silver, instead of a 9% decline, is growing by 4.5%?
The situation is slightly calmer in the case of gold, which instead of losing more than 7%, is losing only 0.1%, and at times it has gone into positive territory. The bottom occurred at 7:35 our time, then there were increases. Significant declines continued only in platinum (-2.8%).
The decline in prices began on Friday, when the price of gold on the spot market fell by more than 9%. in one day, the deepest since 1983while silver plunged by 27%, which is biggest daily decline in history – writes Reuters.
Analysts blamed the sale of precious metals on, among others, on the perception of Kevin Warsh, Donald Trump's new choice for the position of Fed head, whose nomination was officially announced by the president on Friday. Warsh is considered a hawk, so all markets previously fueled by capital escaping from Fed rate-linked debt securities and bank deposits now “realize” how overheated they are.
“Markets' decision to sell precious metals alongside U.S. stocks suggests investors view Warsh as more hawkish,” said Vivek Dhar, commodities strategist at Commonwealth Bank of Australia, quoted by Reuters.
“During his time at the Fed, Warsh was consistently concerned about inflation and often supported higher interest rates,” mBank analysts point out in a note to investors.
Kevin Warsh, i.e. a hawk and sometimes a dove
Warsh served on the Fed's Board of Governors from 2006 to 2011 and previously advised Trump on economic issues. His hawkish nature is somewhat belied by the fact that Warsh won Trump's favor in 2025 by publicly advocating interest rate cuts, at odds with his longtime reputation as an anti-inflation hawk.
“He was a hawk and a critic of the Fed, recently he struck dovish tones and talked about the beneficial impact of productivity growth on the room for cuts,” say Bank Pekao analysts.
On two reductions this year of 0.25 percentage points each. the majority of the market is still betting, because according to the Chicago interest rate contracts, 69 percent are betting on such reductions. investors. The first one is to take place in June and the second one in September.
A hawkish stance would keep interest rates higher for a longer period of time, which would support the dollar and raise the opportunity cost of gold and silver, making them less attractive.
— The Fed chairman's selection will now move from the “first response” phase to “boring congressional hearings” in the coming weeks, but that will allow markets to better evaluate Kevin Warsh's candidacy, especially on his approach to the Fed's balance sheet, which was the subject of a somewhat nervous market reaction on Friday afternoon. Markets are also trying to find a new level of balance in precious metals after the strong sell-off on Friday – today's decline was much smaller and demand is activating – comments Marek Rogalski, chief currency analyst at DM BOŚ.
Margins on contracts are up
“A stronger U.S. dollar also puts pressure on precious metals and other commodities, including crude oil and base metals,” added Dhar, who maintains the gold price forecast at $6,000. in the fourth quarter of this year.
The sales of precious metals also accelerated because CME Group increased margins on metals futures contractswhich took effect from the market close on Monday. Increasing margin requirements tend to have a negative impact on the affected contracts because higher capital outlays can reduce speculative participation, reduce liquidity and force investors to close out their positions.
