Gold and silver staged a dramatic reversal on Monday, trimming recent gains as markets digested a surprise shift in Fed expectations — even as the UK’s blue‑chip FTSE 100 hit a fresh record.
What happened to gold and silver
- Gold plunged as much as 8% to $4,465 an ounce early on Monday — wiping out the record run that pushed it toward roughly $5,600 last week — before recovering some ground to trade around $4,700 in afternoon London deals (about 3.5% below the prior close).
- Silver, which had already collapsed about 30% on Friday, fell another 7% at one point and later settled near $79.60 an ounce.
Why the shock sell‑off
The move was sparked by US political and central‑bank developments. On Friday Donald Trump announced he would nominate Kevin Warsh, a former Fed governor with deep central‑bank credentials, to succeed Jerome Powell when his term ends in May (subject to Senate confirmation). Trump also said he had not asked Warsh to commit to rate cuts.
Markets took the nomination as a signal that the next Fed chair may not be a dovish “cheerleader” for looser policy. “Now financial industry heavyweight Kevin Warsh has been anointed as successor… he’s not expected to be a pushover and that’s sparked this big reversal of safe‑haven positions,” said Susannah Streeter of broker Wealth Club. Michael Brown, senior research strategist at Pepperstone, called the recent moves a “meltdown in the metals space.”
Broader market moves and spillovers
- The partial recovery in metals helped underpin equities: the FTSE 100 breached 10,300 for the first time, closing at 10,341 after an intraday high of 10,345.
- Industrial metals also dipped, with platinum and copper sliding.
- Oil weakened as geopolitical risk cooled: Brent fell about 4% to roughly $65.24 a barrel, down from highs near $71 last week.
- US stocks opened higher, with the S&P 500 up about 0.4% at the open.
- The dollar rebounded 0.43% against a basket of currencies after a late‑January slump.
Crypto angle — bitcoin and correlations
Bitcoin recovered some losses over the weekend and rose about 1.8% against the US dollar, but remained under $80,000 — a long way from last year’s peak near $125,000. The episode underscores how shifts in Fed expectations and safe‑haven flows can move both traditional precious metals and crypto assets, creating cross‑market volatility for traders.
Where analysts stand
Despite the recent pullback, some strategists remain bullish on gold: Deutsche Bank analysts said they still expect gold to reach $6,000 this year. Mohit Kumar of Jefferies described the drop as an “unwind” of a crowded trade — positioning metrics that had approached 8 (on a -10 to 10 scale) fell to just above 4 in the last two days, suggesting many weaker long positions were flushed out.
Context: still large gains year‑on‑year
Even after the sharp swings, gold is roughly 65% higher than a year ago and silver is up more than 120%, reflecting how investors piled into perceived safe havens amid geopolitical tensions and uncertainty over central‑bank policy.
Takeaway for crypto readers
The metals sell‑off and Fed‑related repricing show that macro catalysts — political nominations, Fed signals, and changes in dollar or bond yields — can quickly alter risk perceptions across asset classes, including crypto. Traders should watch Fed developments, safe‑haven demand and cross‑market flows, which are likely to remain key drivers of volatility in both metals and digital assets.
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