A Nomination Sparks an Epic Sell-off: Spot Silver Once Plunged 36%, Gold Price Fell Below 5000

On Friday (January 30th) New York time, international precious metals prices plummeted sharply, with spot silver once dropping over 36% and gold falling more than 12% at its peak.

The specific market data shows that the spot silver price accelerated its decline starting from 23:00 Beijing time, falling to a intraday low of $74.31 per ounce around 02:40 AM, with a maximum decline of over 36%. As of the time of writing, silver is quoted at $85.8, with the decline narrowing to around 26%.

The price of spot gold also nearly dropped to an intraday low of $4683.04 per ounce around the same time, with a maximum decline of over 12%. As of the time of writing, gold is quoted at $4906, with the decline narrowing to approximately 8.8%.

This round of sharp decline in precious metals was initially triggered by the news that “Trump announced the nomination of Kevin W. as the next Federal Reserve Chair,” with some analysts believing that this nomination eased market concerns about the Fed’s independence, boosting the dollar and suppressing gold and silver.

Krishna Guha, Vice Chairman of Evercore ISI, said that the market is trading based on “hawkish W.,” “W.’s nomination helps stabilize the dollar and reduces the unilateral risk of the dollar’s continued weakness, thereby challenging the logic of ‘currency devaluation trades’—which is also the reason for the significant decline in gold and silver.”

“Currency devaluation trades” refer to investors avoiding government bonds and currencies due to concerns over ongoing government debt expansion, instead flocking to physical assets, especially precious metals.

In addition, the appreciation of the dollar will also increase the cost for investors outside the US to buy gold and silver.

Guha added, “We do not recommend over-committing to W.’s hawkish stance across various assets, and such trades may even face repeated volatility. We believe W. is pragmatic rather than a traditionally hard hawk.”

Miller Tabak stock strategist Matt Maley said the market is simply too crazy, “Much of it might be ‘forced selling.’ Recently, silver has been one of the hottest assets for intraday and short-term traders, with a lot of leverage accumulated in the market. After today’s plunge, margin call notices have been appearing one after another.”

Claudio Wewel, FX strategist at J. Safra Sarasin Sustainable Asset Management, believes that this year’s rise in precious metals is driven by a “perfect storm” of geopolitical tensions, such as the US raid on Venezuela to arrest Maduro, and Trump’s threats to use military force in Greenland and Iran.

He also pointed out that recent speculation about who will be the next Fed Chair has also affected the precious metals market, “The market previously priced in the risk of a more dovish candidate, which largely supported the prices of gold and other precious metals. But in the past 24 hours, the news environment has changed.”

Katy Stoves, investment manager at UK wealth management firm Mattioli Woods, said this wave of market action is likely a “comprehensive reassessment of concentrated risk.”

“Just like tech stocks—especially AI-related stocks—attract a lot of capital and attention, gold has also experienced crowded trades. When everyone bets on the same direction, even quality assets can fall due to forced liquidations. This similarity is no coincidence: both are driven by strong narratives attracting capital inflows, and concentrated holdings will ultimately face liquidation.”

Toni Meadows, investment director at BRI Wealth Management, believes that gold breaking above $5000 is “too easy,” “Central bank buying has driven the long-term rise, but it has clearly weakened in recent months.”

“Nevertheless, the reasons for countries to continue diversifying their foreign exchange reserves still exist, as Trump’s trade policies and foreign interventions make many countries uneasy about holding US assets.”

(Source: Caixin)