Gold Plunges 4%—Just Because of “Fed Chair Rumors”?
Gold prices fell sharply on Friday (January 30th) after the market was busy betting that the next Fed Chair would be more hawkish. Spot gold fell 4.2% to $5,172.80/oz at 07:16 GMT, after dropping more than 5% and hitting a record high of $5,594.82/oz the day before.
Despite today's loss, gold's monthly performance remains impressive: prices have risen more than 20% so far in January, potentially marking the strongest monthly gain since 1982—as investors seek safe havens amid geopolitical tensions and economic uncertainty.
The main trigger for the correction: rumors that Trump is leaning toward a more hawkish figure to lead the Fed, with strong speculation pointing to former Fed Chairman Kevin Warsh. When the market believes interest rates will be more difficult to lower, gold typically responds easily.
The US dollar has also recovered from multi-year lows, adding to the pressure on gold. When the dollar strengthens, gold becomes more expensive for non-USD buyers, causing demand to quickly "slow down."
The correction was also triggered by technical factors: after a long rally, gold is considered overbought, so profit-taking is natural when there is a catalyst that changes interest rate expectations.
Interestingly, the market still expects two interest rate cuts in 2026, so the bullish gold narrative isn't completely dead—it's just that volatility has increased as the next Fed policy direction and figures are again the "main drama."
Today's weakness also dragged down other metals: silver fell 6.1% to $109.03/oz after a record $121.64, while platinum and palladium also fell sharply. At the same time, physical flows remained strong—Swiss gold exports to the UK surged, and the Hang Seng Gold ETF surged >9% on its debut.
5 key points:
- Spot gold fell 4.2% to $5,172.80, a day after a record $5,594.82.
- January is still up over 20%, potentially the best month since 1982.
- Rumors of a more hawkish Fed chair (Warsh) are putting pressure on gold.
- The dollar strengthens → gold becomes more expensive for buyers outside the US.
- Silver, platinum, and palladium also plummet after an extreme rally. (asd)
Source: Newsmaker.id
