SINGAPORE, Jan 30, 2026, 15:30 (SGT)
- Gold dropped over 4% at one stage after Trump announced he plans to reveal his next Fed chair on Friday
- Silver, platinum, and palladium fell back following a week marked by record highs
- Despite the recent pullback, gold is on track for its best monthly rise since 1980
Gold and silver dropped in Asian trading Friday as investors awaited U.S. President Donald Trump’s nomination for the next Federal Reserve chair. Markets see this decision as a key signal for the direction of U.S. interest rates going forward.
The sell-off is significant, coming on the heels of a rare, once-in-a-generation rally in precious metals. Gold remains over 20% higher for January and is set for its largest monthly gain since 1980, making prices susceptible to sharp moves whenever the dollar or interest rate expectations shift.
Stocks, the dollar, and bond yields shifted simultaneously. A Reuters report naming Kevin Warsh as the probable Fed pick sparked a drop of up to 1.3% in MSCI’s Asia-Pacific index ex-Japan. U.S. equity futures also edged lower, while Treasury yields climbed. 1
Spot gold — for immediate delivery — dropped about 3% to $5,232.57 an ounce by 0520 GMT, after plunging over 5% earlier in the session. The metal had hit an all-time high of $5,594.82 on Thursday. Spot silver also slid 3.6% to $111.99, following a record peak of $121.64 just a day before, according to Reuters data. 2
Traders cited stretched positioning and a stronger dollar as key drivers. Tim Waterer, chief trade analyst at KCM, highlighted a “potentially less dovish” tone from the Fed chair—meaning less likely to cut rates—as a factor behind the pullback, along with the dollar’s rebound and overbought market conditions.
Trump plans to reveal his pick to succeed Jerome Powell on Friday, amid market buzz and media reports naming Warsh, a former Fed governor, as the frontrunner. ABC News pointed out that Powell’s term ends on May 15 and highlighted that some investors view Warsh as less inclined to lower rates compared to National Economic Council director Kevin Hassett, another candidate.
The policy focus isn’t only on rate levels. Damien Boey, portfolio strategist at Wilson Asset Management, noted that Warsh “prefers lower rates” but also wants a “smaller balance sheet” — meaning the Fed’s holdings of bonds and assets shrink, tightening market liquidity. Tim Kelleher, head of institutional FX sales at Commonwealth Bank, said the headlines had already triggered “some dollar buying.”
Some analysts warn the metals rally is becoming part of the problem. Ole Hansen, head of commodity strategy at Saxo, said the surge is entering a “dangerous phase,” with rapid price swings making it tougher for buyers and sellers to find common ground. 3
The shift wasn’t limited to gold. Platinum dropped 3.7% to $2,531.84, while palladium slipped 4% to $1,925.50, following record or multi-year peaks earlier this week, per Reuters pricing.
Behind the scenes, flows have been active. Reuters highlighted customs data revealing Swiss gold exports to the UK—the largest over-the-counter gold trading center globally, where transactions occur directly rather than on exchanges—reached their highest level since August 2019. In Hong Kong, the Hang Seng Gold ETF surged over 9% during its trading debut the day before, according to Reuters.
Australian strategist Shane Oliver at AMP described the sell-off as a textbook pullback. “Gold has been overbought and got ahead of itself,” he told ABC, noting it was “vulnerable to a pullback” after its “exponential” rise. 4
This market is still driven by rumour and positioning. If Trump appoints a chair perceived as more open to rate cuts, or if the dollar’s rally loses steam, gold and silver could find a floor fast — but the same leverage that sent prices soaring might trigger another sharp sell-off if volatility remains elevated.
Trump’s announcement on Friday will be the next key trigger, ahead of the Fed’s policy meeting on March 18. Futures markets continue to favor steady rates for the moment, though they’re already pricing in cuts down the line in 2026.
