Precious metals sold off violently on Friday after President Donald Trump announced Kevin Warsh as the next Federal Reserve chairman, ending a powerful rally that had stretched for weeks.
• SPDR Gold Shares stock is showing notable weakness. What’s behind GLD decline?
Silver prices plunged as much as 33% to $78 an ounce during midday trading in New York, marking a historic reversal from the explosive gains the metal had posted earlier in the month.
If the session closes near these levels, it would be silver’s worst single-day decline since 1980.
Just a day earlier, silver had been on track for its best monthly performance since the U.S. Civil War in 1864, up roughly 60%. By the final trading day of January, that surge had abruptly collapsed into a still sizeable but far less extraordinary monthly gain of around 10%.
Gold Drops Below $5,000 As Wall Street Reprices Fed Independence Fears
The reversal was equally violent in gold. The yellow metal fell to $4,700 per ounce, a 12% daily decline that would also mark gold’s worst session since March 1980 if sustained into the close.
The SPDR Gold Shares (NYSE:GLD) tumbled 12% – the fund’s worst day since its inception in 2004.
Chart: Gold and Silver Suffer Historic Collapse as Warsh Wipes Out Speculative Longs
The vertical collapse in precious metals reflects how markets are interpreting Warsh’s nomination.
A long-time opponent of quantitative easing, Warsh is widely viewed on Wall Street as a hawk — a policymaker more focused on inflation control than on supporting employment.
That perception has sharply reduced, if not entirely erased, earlier fears that the Federal Reserve could lose credibility or independence under political pressure from the Trump administration.
As a result, the so-called “debasement trade” — short dollar, long commodities, especially precious metals — which had defined market trends throughout January, suffered its most brutal reversal on the final trading day of the month.
Equity markets also reacted negatively to the news, though the magnitude of the sell-off was nowhere near that seen in metals. The Nasdaq 100 fell 1.1% to 25,600, the Dow Jones slipped 0.9% to 48,640, and the S&P 500 declined 0.6% to 6,926.
Sentiment was further pressured by macro data showing U.S. producer prices rose 0.5% month over month in December, well above the 0.2% consensus forecast, reinforcing inflation concerns.
On the earnings front, Sandisk Corp. (NASDAQ:SNDK) stood out as a bright spot. The company smashed expectations, sending shares up 11% on the day and an eye-catching 150% year to date, making it the top-performing stock in the S&P 500 for the month and underscoring the severity of the global memory and storage supply crunch.
| Major Indices | Price | 1-day (chg. %) |
| S&P 500 | 6,925.48 | -0.6% |
| Dow Jones | 48,654.08 | -0.9% |
| Nasdaq 100 | 25,587.89 | -1.1% |
| Russell 2000 | 2,609.29 | -1.7% |
According to Benzinga Pro platform:
- The Vanguard S&P 500 ETF (NYSE:VOO) slipped 0.74% to $633.57.
- The SPDR Dow Jones Industrial Average (NYSE:DIA) declined 0.93% to $485.65.
- The tech-heavy Invesco QQQ Trust Series (NASDAQ:QQQ) fell 1.27% to $621.45.
- The iShares Russell 2000 ETF (NYSE:IWM) dropped 1.83% to $258.55.
Photo: Shutterstock
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