Precious Metals Plunge: Gold Tumbles Below $4,900, Silver Crashes 25% in Historic Sell-Off
In a stunning turnaround, the blistering rally in precious metals came to a crashing halt on Friday. Gold futures (GC=F) plummeted as much as 11%, sinking below the $4,900 per troy ounce mark. The spot price recorded its most severe single-day drop in over four decades.
The sell-off was even more brutal for silver (SI=F), which nosedived more than 25%—its largest daily percentage decline on record. This wiped out a substantial portion of its meteoric gains, pulling it back to around $83 an ounce after briefly touching $120 just a day prior.
The volatility rippled across financial markets, aligning with a broader equity sell-off. The downturn followed President Trump's nomination of former Fed governor Kevin Warsh to lead the central bank. Markets interpreted the selection of the historically hawkish Warsh as a move that could bolster the Fed's inflation-fighting credibility, easing long-held concerns about political influence and triggering a recalibration of trades predicated on a perpetually weak dollar.
Analysts had been warning that the parabolic ascent 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, noted the historical precedent for such sharp corrections. "The higher metals rise, the more likely 2026 will mark enduring price peaks — notably for silver — if history is a guide," he wrote. "There are always sound fundamental reasons for rallies, but when prices rise as rapidly as they have, deficits can shift fast."
The plunge represents a stark contrast to the bullish sentiment that dominated just days ago. After the Federal Reserve held rates steady earlier in the week, gold had surged past $5,500. The momentum had led firms like Goldman Sachs to project a year-end target of $5,400, citing robust private investor demand.
Market Voices:
"This was a necessary and healthy correction. The market got ahead of itself, driven by speculative fever rather than just fundamentals. It restores some sanity," said David Chen, a portfolio manager at Horizon Wealth Advisors.
"It's absolute carnage and exposes the fragility of this so-called 'safe-haven' trade. The algorithms just piled in and now they're piling out. Retail investors holding the bag will be devastated," argued Maya Rodriguez, an independent trader and frequent market commentator.
"The Warsh nomination is the catalyst, but the tinder was dry. This doesn't change the long-term debt and debasement narratives, but it does force a massive leverage unwind," noted Arjun Patel, a senior analyst at Finley Research Group.
While the metals remain up for the year, Friday's historic drop serves as a potent reminder of the risks inherent in even the most fervent market rallies.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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