Washington, United States. A sharp sell-off in precious metals erased $7.4 trillion from global market values, with gold down nearly 9% from its record high of $5,598 and silver falling 27% from its $121 peak. The decline occurred without major fundamental economic shocks, with the move attributed to a sudden contraction in global liquidity.
Market reaction to Federal Reserve leadership signal
The sell-off accelerated after Donald Trump named Kevin Warsh as his choice to lead the Federal Reserve. Markets shifted toward expectations of a stronger US dollar and a faster retreat from monetary easing, contributing to a rapid unwind in heavily positioned trades in precious metals.
Margin calls and risk-management algorithms amplify declines
Analysts cited by CNBC and Market Watch said the drop was driven largely by margin calls and rigid risk-management algorithms rather than a change in investor conviction. Silver’s smaller market and higher leverage magnified the move, and its decline was described as its most severe daily crash since 1980.
Physical demand offers limited near-term support
While physical demand for precious metals remains strong in regions including the Middle East, that support was seen as insufficient to offset short-term volatility in futures and ETF markets.
Liquidity risks and portfolio diversification concerns
The episode was described as highlighting how portfolios that appear diversified can move in tandem during volatility spikes, as investors seek liquidity at the same time. Analysts said stability is likely to depend on a reduction in volatility rather than a technical rebound in prices.
How has this precious metals sell-off affected your view of gold and silver as safe-haven assets?
