In the early hours of January 31 (Beijing time) the precious-metals market experienced an unprecedented rout: spot silver plunged as much as 36% intraday — a record single-day swing — and spot gold fell over 12% at its low, marking the largest intraday percentage drop for the metal in roughly four decades. By the close, gold had recouped some ground but still finished down 9.25% at $4,880 per ounce, while silver settled 26.42% lower at $85.259 per ounce after hitting an intraday trough near $74.28.
The sudden sell-off rippled through risk assets and currencies. The dollar index jumped around 0.9%, its largest one-day advance since last July, while US equities finished lower — the Dow down 0.36%, the S&P 500 off 0.43% and the Nasdaq sliding 0.94%. Shares of gold miners were particularly hard hit, with leading producers such as Newmont, Barrick and Kinross plunging into double-digit losses and several royalty companies near or below 10% declines.
Traders and analysts pointed to a confluence of catalysts rather than a single smoking gun. The immediate trigger appears to have been a report — later confirmed — that President Trump would nominate former Fed governor Kevin Warsh as the next Federal Reserve chair. That news coincided with a rebound in the dollar and prompted rapid liquidation of long positions in precious metals. Bloomberg and other market-watchers noted the sell-off represented the biggest shock to the recent bullion rally since last autumn.
Market strategists say the announcement merely exposed crowded positioning. Suki Cooper, global head of commodity research at Standard Chartered, said markets were due for a correction and that the Fed-chair news, dollar strength and broader capital flows combined to spark profit-taking. In thin overnight liquidity, heavy selling can cascade into forced liquidations and extreme intraday moves — a pattern familiar to traders who watch metals at Asian trading hours.
The political dimension amplified market nervousness. Warsh’s record as a Fed governor has long been associated with inflation vigilance and support for higher rates; more recently he has signalled openness to deeper rate cuts, a shift that was cited by the White House and has unsettled some central-bank watchers. The nomination prompted fresh debate over the Fed’s independence, the future path of US interest rates and how monetary policy might be shaped under overt political pressure.
For investors, the episode has immediate and broader implications. In the short term, the rout pressures leveraged and retail positions in metals and mining stocks and increases the risk of margin calls and forced selling if volatility persists. Over the medium term, volatility in safe-haven assets complicates portfolio hedging and raises the stakes for incoming Fed leadership: markets will watch confirmation proceedings and forthcoming macro data closely to reprice expectations about interest rates, the dollar and inflation.
This is not merely a commodities story. A dramatic re-pricing of gold and silver recalibrates risk metrics across emerging-market currencies, sovereign bond yields and inflation hedges, while also hitting listed miners and funds that had been a channel for retail and institutional money into the inflation narrative. Policymakers and market participants will now assess whether this was a violent but transient unwind of crowded positions, or the start of a more durable rotation away from precious metals as a portfolio hedge.