Gold and Silver Prices Plunge After Record-Breaking Rally
Gold and silver prices dropped sharply late last week after reaching historic highs, marking one of the most volatile periods for precious metals in years. Gold climbed to record levels above $5,600 per ounce earlier in the week, while silver surged to roughly $120 per ounce. By Friday evening, gold prices had fallen below $4,700 per ounce, with silver also posting steep losses.
The rapid reversal followed a surge in global demand that had driven prices sharply higher since the start of 2026. Precious metals markets experienced heightened trading volumes as investors rushed to buy and sell amid extreme price swings.
Investor Demand Fueled Earlier Surge
The rally was fueled by strong investor demand across multiple segments of the market. Consumers worldwide lined up at local retailers to sell gold jewelry, while others purchased coins and bars for the first time. Institutional investors increased exposure through exchange-traded funds tied to gold and silver prices, amplifying upward momentum.
Earlier in the week, spot gold prices in New York exceeded $5,400 per troy ounce, the standard measurement for precious metals. Futures prices soon followed, signaling strong short-term confidence before the sudden pullback.
Despite the sell-off, prices remain significantly higher than one year ago, when gold traded below $2,800 per ounce, underscoring how dramatically the market has shifted over the past twelve months.
Uncertainty and Geopolitics Drive Safe-Haven Buying
Rising interest in gold and silver has historically coincided with periods of uncertainty, and recent geopolitical developments played a key role in pushing prices higher. Ongoing wars, escalating tensions involving Venezuela and Iran, and President Donald Trump’s increasingly aggressive posture toward U.S. allies contributed to heightened global anxiety.
Trump’s repeated calls for a U.S. takeover of Greenland and the expansion of tariffs added to broader concerns about international stability and economic retaliation.
Daniel McDowell, a political science professor at Syracuse University, told the Associated Press that there has been “a real breakdown in the way we think about how the world order works, if we want to call it that.” He described gold buying during unstable periods as a “psychological reaction” by investors seeking security.
Fed Nomination Triggers Market Reassessment
The sharp decline in precious metals prices accelerated after reports emerged that President Trump plans to nominate former Federal Reserve official Kevin Warsh as the next chair of the U.S. central bank. Warsh would replace current chairman Jerome Powell when his term expires in May, pending Senate confirmation.
Warsh has long been viewed as a monetary policy hawk, favoring higher interest rates to control inflation. His potential appointment raised questions about the future independence of the Federal Reserve and signaled a possible shift away from aggressive rate cuts.
Trump has repeatedly criticized Powell for not lowering rates fast enough and has argued that rate reductions are necessary to reduce borrowing costs tied to the federal government’s $38 trillion debt.
Profit-Taking and Dollar Strength Pressure Prices
The prospect of tighter monetary policy and greater White House influence over the Fed strengthened the U.S. dollar, putting pressure on gold and silver prices. A stronger dollar tends to reduce demand for dollar-denominated commodities, particularly among international buyers.
As prices retreated, profit-taking intensified among traders who had benefited from the rapid rally. Futures markets showed signs of a broader correction as volatility increased and speculative positions unwound.
Outlook Remains Volatile
Analysts caution that precious metals markets remain highly sensitive to political developments, currency movements, and shifts in investor sentiment. While the recent plunge was sharp, many observers note that volatility is likely to persist as markets continue to digest changes in monetary policy expectations and geopolitical risk.
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