The rapid collapse in the price of gold and silver continues at the start of the week.
02/02/2026, 08:4502/02/2026, 5:04 p.m
With the appointment of Kevin Warsh as successor to Fed Chairman Jerome Powell, an unprecedented sell-off in precious metals began at the end of last week.
Kevin Warsh provides relief for investors – and thus a collapse in the value of precious metals.Image: keystone
Both gold and silver had soared at a dizzying pace in the previous days, rushing from record to record. It was clear to market participants that a lot of hot air had built up. The silver price dropping by 30 percent in one day on Friday has not happened since the 1980s. Gold fell by around 9 percent.
The sell-off continues at the start of the week. At around 7:30 a.m., the price per troy ounce of gold (approximately 31.1 grams) was trading at $4,478.86, a loss of 7.9 percent. The previous daily low is $4,439.70. Meanwhile, silver is once again losing double digits. The current price of $74.17 represents a 12.4 percent decline. At its low this morning, the precious metal cost $72.89.
Traders blame the sell-off on current uncertainty surrounding the US Federal Reserve’s future monetary policy. The appointment of Warsh as Powell’s successor raises doubts in the markets that there will actually be a significant easing of monetary policy. Expectations of interest rate cuts had recently supported precious metal prices.
Rising US dollar is also a burden
Former Fed Governor Warsh was long considered a monetary policy hawk and tended to advocate for higher interest rates. Recently, however, he also criticized the high interest rates. Instead, he calls for a further reduction in the central bank’s bond holdings. This could deprive the financial markets of liquidity and also weigh on precious metal prices.
In addition, precious metal prices had recently been supported by increased geopolitical risks. The US government’s threats towards Iran in particular had caused new uncertainty.
Precious metals – especially gold – are considered safe havens in times of crisis. Silver is also an important industrial metal required for many applications related to AI, robotics and energy.
According to financial strategists, the sharp decline in gold prices reflects a classic correction after an extraordinary rally rather than a collapse of the longer-term bullish thesis. “The decline in gold prices is a classic air bubble after an extraordinary rally,” comments a market expert.
Some pressure is also coming from the US dollar. This increased after Warsh’s appointment last Friday. A stronger greenback makes dollar-denominated gold less attractive to foreign buyers, while higher interest rates raise the opportunity cost of holding the non-interest-bearing yellow metal by making government bonds more attractive as a safe haven. (sda/awp)