Gold price records its biggest daily fall since 1983 after Trump’s announcement about the Fed

New York.– The price of gold plummeted this Friday, registering its biggest daily drop since 1983, after the President of the United States, Donald Trump, announced his intention to nominate Kevin Warsh as the next president of the Federal Reserve (Fed). Spot gold prices retreated 9.5%, settling at $4,883.62 per ounce, after reaching a record high of $5,594.82 the previous day. During the day, the metal fell by as much as 12%, according to market data. In parallel, U.S. gold futures for February delivery fell 11.4%, to $4,745.10 per ounce. The last time the precious metal recorded a comparable drop was February 28, 1983, when it lost 12.1% in a single session.

Impact on other metals

The sharp sell-off extended to other precious metals. Silver plummeted 28%, to $83.99 per ounce, after hitting a record high of $121.64 on Thursday, the biggest daily drop recorded for this metal. Platinum lost 19.2%, settling at $2,125, while palladium fell 15.7%, to $1,682 per ounce. Analysts attributed the movement to accelerated profit-taking, driven by macroeconomic factors and the announcement related to the future conduct of US monetary policy. Suki Cooper, global head of commodities research at Standard Chartered Bank, noted that the correction responds to a combination of macroeconomic flows, the strengthening of the dollar, and expectations about real yields.

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In the foreign exchange market, the dollar strengthened significantly. The Bloomberg Dollar Spot Index rose to 0.9%, its biggest daily advance since July, appreciating against all major currencies. The dollar’s rebound was linked to both the retreat of precious metals and the announcement by Trump that Kevin Warsh, former Fed governor, will replace Jerome Powell starting in May. Traders perceive Warsh as more inclined to contain inflation, which could favor a more restrictive monetary policy and support the dollar. The currencies associated with economies that export metals, such as the Australian dollar, the Swiss franc, and the Swedish krona, led the losses among the Group of 10 currencies. Despite the strong correction, gold accumulated a gain of over 13% in January, marking its sixth consecutive month of increase. Silver, for its part, registered a monthly advance of more than 17%. According to Kathleen Brooks, research director at XTB, the markets show a high level of uncertainty and, although the recent weakness of the dollar has been curbed, it is not clear that this is a definitive trend change.