Gold and silver prices dropped sharply as investors rushed to unwind crowded safe-haven trades. Losses accelerated on Monday after a brutal sell-off late last week. The retreat marked a dramatic shift from the record-breaking rally seen in January.
During Asian trading, spot gold slid more than nine percent to roughly $4,403 per ounce. Silver fell about 15 percent to below $72 per ounce. Both metals had surged earlier this year as investors sought protection from global uncertainty.
Policy clarity weakens demand for safe assets
Strong gains earlier in the year reflected fears over geopolitics and monetary policy stability. Investors also worried about the independence of the US central bank. Those concerns eased after President Donald Trump nominated Kevin Warsh as the next chair.
Financial markets reacted positively to the move. The US dollar rose by around one percent on Friday against several major currencies. As the dollar strengthened, gold posted its sharpest one-day fall since 1983, dropping more than nine percent. Silver plunged by 27 percent in the same session.
Analysts at Deutsche Bank said the nomination acted as the decisive catalyst. They said clearer policy direction triggered heavy profit taking across precious metals.
Global equities fall as selling spreads
The metals rout spilled into broader financial markets. Asian stocks fell sharply on Monday as investor confidence weakened. South Korea’s Kospi index led regional declines, dropping by more than five percent.
Hong Kong’s Hang Seng fell around three percent. Japan’s Nikkei 225 dropped by more than one percent. European markets also opened lower, with the UK’s FTSE 100 down 0.4 percent early in trading.
Mining shares faced intense pressure. Fresnillo and Endeavour Mining both fell by about seven percent as metal prices slumped.
Oil markets weaken amid supply stability
Energy markets followed the downward trend. Global crude oil prices fell by more than five percent. Traders pointed to steady output plans by major producers and easing tensions between the US and Iran.
A stronger dollar added further pressure. Oil trades in dollars, raising costs for buyers outside the US. That effect often dampens demand during periods of dollar strength.
From standout gains to sudden losses
Precious metals delivered exceptional returns throughout 2025. Gold recorded its biggest annual rise since 1979. Markets remained unsettled by trade tariffs and concerns over inflated valuations in artificial intelligence-linked stocks.
Those anxieties pushed metals to repeated record highs. Gold peaked above $5,500 in late January. Silver also reached an all-time high above $120.
Interest rate outlook meets reality
Wall Street analysts expect at least two US interest rate cuts in 2026. Lower rates often support gold by reducing returns on interest-bearing assets.
Gold’s scarcity remains a key attraction. About 216,265 tonnes have ever been mined, according to the World Gold Council. Central bank buying supported the rally that began several years ago.
However, stretched prices left markets vulnerable to sharp corrections. Mark Matthews of Bank Julius Baer told Reuters prices had gone parabolic. He said once profit taking started, selling quickly snowballed.
