Gold and Silver Continue to Sell Off; Gold Falls 5%

• Silver remained under severe pressure, down over 12% to $74.36 per ounce on Monday after logging a 30% nosedive Friday—its worst day since March 1980
• The dollar index strengthened about 0.8% since Thursday as Warsh, an advocate of tighter monetary policy, was nominated to succeed Jerome Powell when his term ends in May
• Despite the correction, both metals remain significantly higher year-to-date (gold up 8%, silver up 16%) after surging 65% and 145% respectively in 2024

Gold and Silver Extend Sell-Off Following Historic Rout

Key Developments:

Gold and silver continued their steep decline on Monday following Friday's historic crash. Spot gold fell approximately 6% to $4,538 per ounce on Monday after plunging nearly 10% on Friday, when prices dropped below $5,000. Silver remained under severe pressure, declining over 12% to $74.36 per ounce after Friday's catastrophic 30% nosedive—its worst single-day performance since March 1980.

Peak to Current:

Both metals retreated sharply from record highs reached just days earlier, with gold peaking near $5,600 per ounce and silver reaching $122 per ounce on Thursday morning.

Market Drivers:

The sell-off was triggered by multiple factors:

• President Trump's nomination of Kevin Warsh to succeed Fed Chair Jerome Powell in May
• Strengthening U.S. dollar (up 0.8% since Thursday)
• Profit-taking after extraordinary rallies
• Warsh's reputation as an advocate for tighter monetary policy

The stronger dollar makes gold less attractive to foreign buyers, while expectations of tighter policy increase the opportunity cost of holding non-yielding assets. Additionally, Trump's comments about a potential Iran deal eased geopolitical tensions, with oil futures down 4% on Monday.

Year-to-Date Performance:

Despite the sellback, silver remains up approximately 16% year-to-date, while gold is up 8%. Both metals delivered exceptional returns in the previous year, with gold surging 65% and silver jumping 145%.

Outlook:

Analysts characterize the decline as a "classic correction" rather than a trend reversal. Near-term volatility is expected as markets assess Warsh's policy direction, though longer-term bullish sentiment persists if Fed easing continues amid uneven growth and inflation.