"Warsh Effect?" Gold, Silver Suddenly in Chaos
The precious metals market exploded in a reversal on Friday (January 30th). After an "irrational" rally that lifted prices to record highs, gold then plunged the most in decades, while silver recorded its largest intraday decline in history. This was no ordinary correction—it was a shock.
Gold briefly plunged more than 12% and fell below $5,000/oz, its largest daily decline since the early 1980s. Silver collapsed more than 36% intraday. The effects were widespread: copper on the London Metal Exchange fell around 3%+ after just setting a record. At the same time, the dollar strengthened, making USD-denominated commodities increasingly expensive for non-dollar buyers—sentiment immediately weakened.
What made the market vulnerable was actually already apparent: position congestion. Over the past year, investors have been chasing precious metals out of fear of currency depreciation, the issue of Federal Reserve independence, trade wars, and geopolitics. January is heating up—prices are going parabolic, volatility is rising, and even the slightest trigger can trigger the "dump" button.
The trigger that day: the dollar surged after news (and later confirmed) that the Donald Trump administration was preparing to nominate Kevin Warsh to replace Jerome Powell. At the same time, the market, previously comfortable with the "Trump is willing to let the dollar weaken" narrative, was reset—immediately resorting to mass profit-taking. Furthermore, the "overheated" market was exacerbated by technical analysis: the gold RSI was said to have reached an extreme level (severely overbought), so a correction was just waiting for a trigger.
And once the selling began, a domino effect occurred: mining stocks caught fire. Big names like Newmont, Barrick Mining, and Agnico Eagle Mines also fell sharply. Even market participants acknowledged that the psychological levels of $5,000 (gold) and $100 (silver) were being broken back and forth—a sign of a "wild" market; Heraeus Precious Metals said: "We must be prepared, the volatility could continue."
Source: Newsmaker.id
