Gold and Silver Extend Losses After Historic Plunge, Testing Safe-Haven Narrative
Gold and silver prices extended their dramatic slide in Asian trading on Monday, deepening losses from Friday's historic sell-off that abruptly ended a months-long rally. The reversal calls into question the durability of the metals' status as premier safe-haven assets.
Spot gold fell more than 7% to $4,506 an ounce, while silver tumbled roughly 10% to $76 an ounce. This follows Friday's staggering declines, which saw gold post its sharpest single-day drop since 1983, falling over 9%, and silver plunge an eye-watering 27%.
The sell-off marks a stark reversal from late January, when gold soared above $5,500 and silver breached $120, setting fresh all-time highs. That rally was fueled by aggressive central bank buying, geopolitical tensions, and investor anxiety over lofty equity valuations, particularly in the AI sector.
Market analysts point to a sudden shift in sentiment triggered by President Donald Trump's nomination of former Fed governor Kevin Warsh to lead the U.S. Federal Reserve. Warsh, perceived as a potential inflation hawk, has led some investors to reassess expectations for prolonged ultra-loose monetary policy. "The Warsh nomination was the catalyst," said market strategist Eleanor Vance. "It introduced uncertainty about the Fed's future path and prompted a massive profit-taking event after an extraordinary run."
While supportive fundamentals like relative scarcity—only about 216,265 tonnes of gold have ever been mined—remain, the episode highlights gold's volatility. "This is a classic case of 'buy the rumor, sell the news,'" commented portfolio manager David Chen. "The fear trade became overcrowded. Once the momentum broke, the unwind was violent, especially in the more speculative silver market."
Looking ahead, the focus returns to macroeconomic indicators and central bank policy. Many Wall Street firms still forecast at least two Fed rate cuts in 2026, a environment typically supportive for non-yielding bullion. However, the recent volatility serves as a potent reminder that even traditional havens are not immune to sharp corrections.
Market Voices
Eleanor Vance, Market Strategist at Sterling Capital: "This is a healthy correction, not a bear market. The long-term drivers—debt, diversification, geopolitical risk—haven't disappeared. This pullback may offer a better entry point for institutional buyers."
David Chen, Portfolio Manager at Horizon Funds: "The speed of the drop is concerning. It suggests much of the recent buying was leveraged and speculative, not dedicated long-term allocation. It undermines the 'stable store of value' thesis in the short term."
Marcus Thorne, Independent Trader: "It's a bloodbath, and it exposes the whole 'safe haven' idea as a joke when algorithms control the flow. They piled in and now they're piling out, crushing the little guy. The fundamentals didn't change in 48 hours—this is pure, unadulterated market manipulation."
Dr. Anya Sharma, Economics Professor: "The reaction to a single personnel nomination is disproportionate but telling. It shows the market is neurotically fixated on liquidity expectations. The real test will be how physical demand—from central banks and retail—holds up at these lower price levels."