Precious Metals Plunge: Gold Sees Worst Day in Decades, Silver Crashes 20% as Rally Unravels

In a dramatic turn for one of this year's hottest trades, precious metals markets suffered a severe collapse on Friday. Gold futures (GC=F) plunged more than 10%, on track for their worst daily performance since the early 1980s, to hover near $4,750 an ounce. The sell-off was even more brutal for silver (SI=F), which tumbled over 20%—marking its largest one-day percentage drop on record—and wiping out a significant portion of its meteoric 2025 gains.

The sharp reversal unfolded alongside a broader equity market decline. The downturn followed President Trump's nomination of former Fed Governor Kevin Warsh to lead the Federal Reserve, a move interpreted by markets as likely to ensure a more hawkish monetary policy stance and bolster the central bank's perceived independence.

Analysts had been warning that the blistering, near-parabolic ascent in metals was unsustainable. "The continued surge across metals, especially gold and silver, is entering a dangerous phase," Ole Hansen, head of commodity strategy at Saxo Bank, cautioned on Thursday. "The problem is volatility feeding on itself. As price swings intensify, liquidity thins."

Mike McGlone, senior commodity strategist at Bloomberg Intelligence, echoed the sentiment, noting that rapid price increases can quickly alter market fundamentals. "The higher metals rise, the more likely 2026 will mark enduring price peaks — notably for silver — if history is a guide," he wrote.

The plunge represents a stark contrast to the bullish fervor that had dominated the sector. Just days prior, gold had rallied past $5,500 after a steady Fed policy meeting. Major banks, including Goldman Sachs, had recently issued bullish year-end targets, with Goldman citing $5,400 and highlighting upside risks from private investor inflows.

The dramatic swing underscores the extreme volatility that has gripped commodity markets. Silver, which had briefly topped $120 an ounce last week, was trading around $87 by Friday's close. Despite the crash, silver remains up roughly 28% for the year.

Market Voices: Reaction to the Rout

David Chen, Portfolio Manager at Hartford Capital: "This was a necessary and healthy correction. Leverage had built up tremendously in the futures market. While the long-term thesis for metals amid fiscal deficits and debt concerns remains intact, this washout removes some froth and sets a more stable foundation."

Anya Petrova, Independent Metals Trader: "It's absolute carnage out there. This isn't just a 'pullback'—it's a margin-call driven fire sale. The nomination of Warsh was the trigger, but the powder keg was the massive speculative long positioning. It shows how fragile these paper-driven rallies are."

Marcus Reynolds, Economics Professor at Carlton University: "The market is recalibrating expectations around future Fed policy. Warsh's historical hawkishness suggests a firmer hand against inflation down the line, which is inherently negative for non-yielding assets like gold. The speed of the drop, however, is a lesson in market dynamics over fundamentals."

Riya Kapoor, Retail Investor Forum Moderator: "I'm devastated. So many everyday investors who finally moved into silver last week are now sitting on huge losses. The big banks pump the market with lofty price targets, and then the floor falls out. It feels manipulated. Where were these 'dangerous phase' warnings when prices were screaming higher?"

Ines Ferre is a senior business reporter for Yahoo Finance.

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