Gold and silver prices continued to fall after a dramatic reversal of a rally that had pushed precious metals to record highs.
Spot gold prices fell nearly 10 per cent at one point while silver slumped by 15pc before both metals recovered some ground.
Prices had hit fresh records in January as investors parked money in so-called “safe haven” assets due to geopolitical uncertainties.
Markets had also been worried about the independence of the US Federal Reserve, but metals prices fell on Friday after President Donald Trump nominated Kevin Warsh, a former central bank governor, to be its new chair.
After plunging in Asian trade yesterday, gold then recovered to stand at $4,790 an ounce, down more than 2pc on the day. Silver also rebounded to $82.50 an ounce, a fall of 3.2pc.
The naming of Warsh on Friday had been welcomed in general by the financial markets and triggered a 1pc rise in the value of the US dollar.
While the dollar ticked up, spot gold on Friday recorded its sharpest one-day drop since 1983 with a fall of more than 9pc, while silver plunged 27pc.
“The clear catalyst for Friday’s sell-off appeared to be news... that Kevin Warsh had secured the nomination for Fed chair,” said analysts at Deutsche Bank.
Another reason cited for the slump was changes to trading requirements for precious metals on a major exchange, which made it more expensive for speculators to trade.
Despite the sharp falls, the price of gold has only fallen back to where it was a couple of weeks ago and it is still about 70pc higher than it was at the same point last year.
As well as a continued sell-off among commodities yesterday, Asian stocks also fell, with South Korea’s benchmark Kospi leading losses with a 5pc fall. Elsewhere in the region, the Hang Seng in Hong Kong dropped 2pc and Japan’s Nikkei 225 was more than 1pc lower.
In Europe, the UK’s FTSE 100 index fell at first, but then recovered to rise 1pc. The fall in commodity prices put mining companies under pressure, and gold miners Fresnillo and Endeavour Mining were down by more than 2pc.
US stock markets dipped at first but then saw modest gains with the S&P 500 index up 0.1pc.
In global energy markets, the price of crude oil fell nearly 5pc. This is attributed to a number of factors including major oil producers agreeing to keep output unchanged and signs of de-escalating tensions between the US and Iran.
The rise in the value of the US dollar may also have had an impact, as the oil price is denominated in dollars and it makes it more expensive for non-US buyers.
Precious metals had a blockbuster year in 2025, with gold seeing its biggest annual gain since 1979.
With financial markets spooked by concerns including Trump’s tariffs and fears that artificial intelligence-related stocks were overpriced, gold and silver repeatedly hit new record highs.
Gold peaked above $5,500 at the end of January this year, while silver also hit an all-time high of more than $120.
Wall Street analysts expect the Fed to cut interest rate at least twice in 2026. Gold tends to be seen as a more attractive investment when interest rates are low.
One of the biggest appeals of gold is its relative scarcity. Only around 216,265 tonnes of the metal have ever been mined, according to the World Gold Council trade association.
Gold’s recent run began a few years ago when central banks began buying more bullion, but over the past year the uncertainty caused by geopolitical events such as US tariffs has increased gold’s appeal.
While economic worries can help push up the value of gold, prices can just as easily fall when those concerns ease or investors feel the gains have been overdone.
Mark Matthews, head of research for Asia at Bank Julius Baer, told Reuters that one of the likely explanations for sharp falls of the past couple of days “is that precious metals prices collapsed simply because they had already gone parabolic in the previous week”.
“Once profit taking started, it just snowballed.”
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