Gold and silver prices plunge after Friday's losses

Gold suffers sharpest drop since 1983

A dramatic plunge hit precious metals on Monday as gold nosedived over 9% in Asian trading, settling at $4,403 (£3,222) an ounce. Silver tumbled a staggering 15%, sliding under $72. This downturn follows a surprising reversal from record highs in January, sparked by geopolitical jitters.

Geopolitical uncertainties had driven investors to stash funds in "safe haven" assets like gold and silver earlier in the year. The sudden sell-off started Friday when President Trump nominated Kevin Warsh as the new Fed chair. Markets welcomed this nomination, causing the dollar to rise 1%.

The dollar's rise struck hard. Spot gold experienced its sharpest one-day fall since 1983, dropping more than 9%, while silver plummeted 27%. This massive sell-off comes on the heels of a year of unprecedented gains for precious metals, peaking in January.

The repercussions spread across Asia, with stock markets also suffering. South Korea's Kospi plunged above 5%. Hong Kong's Hang Seng dropped 3%, and Japan's Nikkei slipped over 1%. In Europe, London's FTSE 100 saw a 0.4% opening dip, heavily affecting mining stocks like Fresnillo and Endeavour Mining, both down about 7%.

Meanwhile, crude oil prices sank more than 5%, hit by major producers agreeing to maintain output and signs of easing tensions between the US and Iran. The stronger dollar further burdened oil, making it pricier for non-US buyers.

Market turmoil in 2025 saw gold hitting new records, peaking over $5,500, while silver reached more than $120. With Trump's tariffs and overvaluation fears in AI stocks, investors turned to gold, driving its value to new heights.

Wall Street anticipates the Fed will cut interest rates at least twice in 2026. Typically, low interest rates make gold more appealing. However, fears can ease, and prices can fall just as swiftly, as Mark Matthews of Bank Julius Baer noted.

The rally that began years ago due to central banks buying bullion has now seen a snowball of profit-taking. Precious metals seemed invincible, but the past week's parabolic surge set the stage for this rapid collapse.

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