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A single announcement out of Washington sent gold and silver prices plunging, erasing billions of dollars in market value and catching investors off guard almost overnight.
The dizzying boom ended abruptly Friday morning after President Donald Trump confirmed Kevin Warsh as his pick to lead the Federal Reserve, sending the dollar to its strongest level in months and reshaping expectations for U.S. monetary policy.
Warsh is widely viewed as a free-market, inflation hawk who breaks with much of the current Federal Reserve leadership. Influenced by his studies under economist Milton Friedman, he has long argued that inflation is driven by printing too much money.
That view departs from years of Federal Reserve policy focused on keeping borrowing costs low.
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Kevin Warsh built his career at Morgan Stanley and, at 35, became the youngest person to serve on the Fed’s board in 2006. (Tierney L. Cross/Bloomberg via Getty Images)
For investors, Warsh’s record has signaled a more disciplined approach to inflation and monetary policy.
Addressing inflation under that framework would likely require tighter monetary policy, including higher interest rates. And higher rates typically strengthen the U.S. dollar, giving investors less reason to seek refuge in gold and silver and prompting a selloff in both metals.
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For months, a gravity-defying rally had pushed gold and silver prices to fresh highs, as investors piled into the traditional safe-haven assets amid inflation, trade tensions and concerns about the long-term stability of the dollar under Trump’s economic policies.
Hours before Trump announced Warsh’s nomination, gold and silver were still holding onto recent gains. The news sparked a swift bust, with gold suffering its worst selloff since 2013 and silver posting its steepest one-day drop since 1980.
The sudden reversal rattled investors who had turned to gold as a hedge against inflation and policy uncertainty, including many retirement-age Americans who viewed the metal as a safer place to park their savings.
The sharp swings also raised questions about how much more volatility could lie ahead, as markets brace for further policy signals from Washington and potential changes at the Federal Reserve.
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A person walks past a poster showing ‘American Eagle’ gold and silver bullion coins at a gold dealer’s window in Madrid, on Jan. 30, 2026. (Oscar Del Pozo/AFP/Getty Images)
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Even so, longer-term demand for gold has been supported by steady buying from foreign central banks, including China, which has been diversifying reserves away from the U.S. dollar amid geopolitical tensions.
