Gold and silver prices plunged sharply on Monday, reversing a recent rally that had pushed them to record highs, while the UK’s FTSE 100 stock index shrugged off the turmoil to close at a new record high.
On Monday, gold and silver prices experienced significant declines, with gold falling by approximately 4.6% to $4,659.16 an ounce and silver dropping 7.63% to $78.70. This marked a dramatic reversal from the previous week when both metals hit record highs, with gold exceeding $5,500 and silver reaching $120 per ounce.
The sell-off was triggered by President Donald Trump’s announcement on Friday that he would nominate Kevin Warsh, a former Federal Reserve governor, as the next chair of the US central bank. Warsh’s nomination eased market concerns about the Fed’s independence, which had been under pressure from Trump’s criticism of current chair Jerome Powell. Investors interpreted the move as a sign of stability, leading them to unwind safe-haven positions in precious metals.
Despite the metals meltdown, the UK’s FTSE 100 index demonstrated resilience. After a weak start, it recovered to close up 1.2% at 10,341.56 points, setting a new intraday high of 10,345.48. This record performance came as the dollar strengthened by about 1%, and market sentiment improved with the Fed chair nomination.
Global markets reacted variably to the developments. In Asia, stocks fell sharply, with South Korea’s Kospi index leading losses at 5%, while Hong Kong’s Hang Seng dropped 2% and Japan’s Nikkei 225 was over 1% lower. In contrast, US markets opened higher, with the S&P 500 index gaining 0.5% by the close.
Other asset classes were also affected. Oil prices fell nearly 5%, attributed to eased tensions between the US and Iran and agreements among major producers to maintain output levels. Bitcoin tumbled below $75,000, continuing a slide from Friday as investors pulled back from risky assets amid stalled cryptocurrency legislation in the US.
Analysts noted that the metals sell-off represented an unwind of crowded trades. Russ Mould of AJ Bell commented that investors learned the hard way about the volatility of safe-haven assets, while Susannah Streeter of Wealth Club highlighted the relief from Warsh’s appointment. Despite the sharp falls, gold remains about 70% higher than a year ago, and silver has more than doubled, indicating underlying bullish sentiment.
Looking forward, some experts, such as those at Deutsche Bank, predict gold could still reach $6,000 this year, suggesting that the correction may be temporary. The episode underscores the sensitivity of financial markets to central bank leadership and geopolitical developments, with implications for investor strategy in uncertain times.
