Key Points
- Silver futures plunged 31.4% to settle at $78.53, marking their worst one-day drop since March 1980.
- The selloff began after reports that Kevin Warsh could be nominated as the next Federal Reserve chair, then accelerated as investors rushed to lock in gains.
- A sharp jump in the U.S. dollar added further pressure on precious metals.
Gold and silver prices tumbled Friday after President Donald Trump’s reported choice of Kevin Warsh to lead the Federal Reserve appeared to calm fears about the central bank’s independence—and sent the dollar sharply higher.
Spot silver sank 28% to $83.45 an ounce, hovering near its intraday lows. Silver futures suffered an even steeper slide, plunging 31.4% to settle at $78.53, their worst day in more than four decades.
Gold also took a heavy hit. Spot gold dropped about 9% to $4,895.22 an ounce, while gold futures slid 11.4% to settle at $4,745.10.
The initial drop was triggered by reports of Warsh’s nomination, but selling picked up speed during U.S. afternoon trading as investors who had crowded into precious metals rushed to take profits. At the same time, a stronger dollar made gold and silver more expensive for overseas buyers and undercut the narrative that metals could replace the greenback as the world’s reserve currency.
The dollar index was last trading roughly 0.8% higher.
“This is getting crazy,” said Matt Maley, equity strategist at Miller Tabak. “Most of this is probably forced selling. Silver has been the hottest trade for day traders and short-term investors lately, so leverage had built up. With a move this big, margin calls went out.”
Trump’s Pick Shifts the Narrative
National Economic Council Director Kevin Hassett had long been viewed as the front-runner to replace Fed Chair Jerome Powell, but Warsh surged ahead in prediction markets in recent days.
In a Friday morning note, Evercore ISI Vice Chairman Krishna Guha said markets were “trading Warsh hawkish.”
“The Warsh pick should help stabilize the dollar and reduce—though not eliminate—the risk of a deep, prolonged dollar slide by challenging debasement trades,” Guha wrote. “That’s also why gold and silver are sharply lower.”
Still, Guha cautioned investors against pushing the trade too far, warning of potential volatility. He described Warsh as a pragmatist rather than an ideological hawk.
Claudio Wewel, FX strategist at J. Safra Sarasin Sustainable Asset Management, said a “perfect storm” of geopolitical tensions had fueled precious metals earlier this year, pointing to the U.S. capture of Venezuelan President Nicolás Maduro and Washington’s threats of military action involving Greenland and Iran.
More recently, he said, speculation over who would be nominated as the next Fed chair had become a major driver of metals markets.
“The market had been pricing in the risk of a much more dovish contender, which supported gold and other precious metals,” Wewel said. “Over the last 24 hours, that story has shifted.”
‘Even Good Assets Can Sell Off’
Despite Friday’s collapse, both gold and silver had posted massive gains in 2025, rising 66% and 135%, respectively.
The selloff rippled across the sector. Coeur Mining shares fell 17%, while silver-focused ETFs were hammered. The ProShares Ultra Silver fund plunged more than 62%, and the iShares Silver Trust dropped 31%, with both heading for their worst days on record.
Katy Stoves, investment manager at Mattioli Woods, said the move looked like a broader unwinding of crowded trades.
“Just as tech stocks—especially AI names—have dominated attention and capital flows, gold has seen intense positioning,” she said. “When everyone is leaning the same way, even good assets can sell off as trades get unwound.”
Toni Meadows, head of investment at BRI Wealth Management, added that gold’s rapid run toward $5,000 may have come too easily.
“A weaker dollar supported gold, but the greenback now appears to be stabilizing,” he said. “Central bank buying drove the longer-term rally, but that has slowed in recent months. Silver tends to follow gold, so it’s not surprising to see sharp losses there too.”
After a historic rally, Friday’s brutal reversal served as a reminder: even the hottest trades can turn fast when sentiment shifts.
