NextFin News - Global commodity markets were upended on Friday, January 30, 2026, as gold and silver prices suffered one of their most dramatic single-day collapses in financial history. The sell-off was triggered by U.S. President Trump’s announcement on Truth Social that he has nominated Kevin Warsh, a former Federal Reserve governor and Wall Street veteran, to succeed Jerome Powell as the Chairman of the Federal Reserve. The news immediately reversed a weeks-long rally in precious metals, which had been fueled by fears of politicized monetary policy and runaway inflation.
According to The Telegraph, silver prices plunged by as much as 30% during intraday trading, marking the largest single-day percentage decline on record for the metal. By the close of London trading, silver was hovering around $83.81 per troy ounce, a staggering retreat from the record high of $121.65 reached just 24 hours earlier. Gold followed suit, dropping nearly 10% to approximately $4,850 an ounce, its most significant one-day slide since the 2008 financial crisis. The Bloomberg Dollar Spot Index surged 0.9% in response, posting its biggest gain since July as investors abandoned safe-haven metals in favor of the greenback.
The primary catalyst for this market earthquake was the perceived credibility of Warsh. For much of January, markets had been pricing in the risk that U.S. President Trump would appoint a "loyalist" candidate who would aggressively slash interest rates to support the administration's fiscal agenda, potentially debasing the currency. Warsh, however, is viewed by institutional investors as a market-friendly moderate who has historically advocated for Fed independence and a smaller central bank balance sheet. His nomination effectively punctured the "debasement trade" that had driven gold above $5,000 for the first time earlier in the week.
The scale of the silver crash—a 30% drop—highlights the extreme speculative froth that had built up in the metals complex. Silver, often referred to as the "devil's metal" for its volatility, had gained over 70% in the preceding three months. When the news of the Warsh nomination broke, a cascade of margin calls and stop-loss orders accelerated the decline. According to Bloomberg, the surge in the dollar also hit commodity-linked currencies like the Australian dollar and Swedish krona, as the market recalibrated for a Federal Reserve that might remain more hawkish than previously feared under the new administration.
From an analytical perspective, this crash represents a fundamental shift in the "Trump Trade" 2.0. While the first year of the second term was characterized by uncertainty regarding the Federal Reserve's autonomy, the selection of Warsh suggests a pivot toward orthodox economic management. Warsh has previously argued that the U.S. economy is undergoing a productivity boom driven by artificial intelligence and deregulation, which could allow for growth without immediate inflationary spikes. This "Goldilocks" outlook—strong growth without the need for emergency rate cuts—is inherently bearish for non-yielding assets like gold and silver.
Looking ahead, the path for precious metals appears fraught with technical resistance. The breach of the $5,000 level in gold and the $100 level in silver has created a massive "bull trap" for retail investors who entered the market at the peak. In the short term, further liquidation is likely as exchange-traded funds (ETFs) rebalance their holdings. However, the long-term trajectory will depend on whether Warsh can maintain his independent stance once confirmed by the Senate. If the administration continues to push for aggressive tariffs, the resulting trade friction could eventually reignite safe-haven demand, though the immediate "speculative fever" has clearly broken.
For the broader financial markets, the strengthening dollar and falling metals prices suggest a return to U.S. asset outperformance. While U.S. stocks fell slightly on Friday—the Dow Jones Industrial Average declined 0.4% as investors realized rate cuts might be less frequent under Warsh—the underlying sentiment is one of stabilization. The "Warsh Shock" of January 30 will likely be remembered as the moment the 2026 commodity bubble burst, re-establishing the dollar's dominance in the global monetary hierarchy.
