Precious metals markets experienced a dramatic reversal, with gold and silver prices tumbling sharply after news broke that President Donald Trump will nominate Kevin Warsh as the next Federal Reserve Chair yesterday. The reaction marked a sudden departure from the record-breaking rallies in metals that had dominated markets in recent weeks.
Gold fell sharply, dropping as much as double digit percentages from its near-record highs above $5,500 per ounce earlier in the week. Precious metals futures were hit by one of the steepest one-day sell-offs in decades.
Silver experienced an even more dramatic drop, with some reports suggesting it suffered its worst daily decline since the early 1980s, sliding more than 30% in a single session.
As you can see they recovered a bit by close, but the drop was unprecedented. The catalyst for this sudden downturn was the market’s reassessment of monetary policy expectations following news of Warsh’s nomination and what we call blowoff top as technicals were over extended. One of the clearest transmission mechanisms for the metals sell off was the strengthening of the U.S. dollar. After months of weakness which had supported inflows into gold and silver the dollar index rebounded as traders digested the implications of a Fed leadership likely to resist aggressive monetary easing. A stronger dollar typically puts downward pressure on commodities priced in dollars because it makes those assets relatively more expensive for foreign buyers. In this case, the renewed dollar strength contributed directly to the relentless slide in precious metals prices.
In my last article I emphasized how inflation expectations, geopolitical risk, and monetary policy forecasts were key drivers of the rally. The events of January 30 highlight just how central that last element monetary policy expectations can be. I want to underscore how quickly that narrative can shift when expectations for interest rates and central bank independence change. The sell off is a real world example of the feedback loop between policy expectations and asset prices that reinforces the need for caution when positioning.
I'm glad I off load almost all my share at near all time highs. It's been a wild ride for gold and silver the last few months. I'm wondering what next week will have in store for us.
It’ll be interesting to see if the panic continues on Monday
I'm watching wides open
Will you try to buy anything back now…???
I want lover
I take it, you want to see lower prices, right…??? You could buy Common U.S. Coinage now, and use it to buy Silver for $9 per ounce on the other side of the Reset…
Everything is getting hammered right now, it's nuts!
Yeah I just saw crypto got smacked yesterday too
Read my post for the true cause!!!
Will do!
A wilder ride than the first time i rode the local wooden frame roller coaster, while I thought the market need a healthy pullback to breath, it got nuked instead. It seems contrived to me how everything lined up too perfect. The fundamentals are still there, I took this as an opportunity to add to a Miner and metals ETF positions.
It's been wild
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That is really a massive bleeding for silver. Well I have actually predict it ahead
Wow, gold & silver prices plunging! Trump's new Fed Chair pick causing a sudden shift 💥
Market reacts fast