Gold trades at $4975 per ounce as of writing, down more than 7% on the day after briefly slipping to $4,941.79. Spot gold fell as much as 7.5% during the session before trimming losses, while U.S. gold futures dropped over 7%. The sharp move followed a rapid strengthening of the U.S. dollar after President Donald Trump signaled he would announce his nominee for the next Federal Reserve Chair later Friday.
Source: Investing.com via X
Markets reacted swiftly after Trump confirmed his Fed chair pick, with multiple reports also pointing to former Fed Governor Kevin Warsh as the leading candidate. Trump told reporters that many believed Warsh could have held the role years ago. According to the latest news, U.S. President Donald Trump defended his decision not to nominate Kevin Hassett to lead the Federal Reserve, saying he chose to keep his top economic adviser in place while ultimately selecting Kevin Warsh to succeed Jerome Powell.
Warsh, who lost out to Jerome Powell in 2017, has supported aggressive balance sheet reduction and has shown openness to rate cuts. Analysts described him as one of the more market-friendly options, noting that his potential nomination may ease fears over a loss of Federal Reserve independence.
Dollar Rebound Pressures Gold Prices
As expectations around the Fed leadership announcement firmed, the U.S. dollar rebounded from a four-year low. A stronger dollar increased pressure on gold, which becomes more expensive for overseas buyers when the greenback rises.
Source: TradingView via X
Analysts noted that gold now serves increasingly as a source of liquidity during periods of stress rather than functioning purely as a safe-haven asset. The sell-off unfolded alongside a broader decline in U.S. equities, reinforcing the risk-off tone.
Monthly Gains Remain Historically Strong
Despite Friday’s tumble, gold still tracks a gain of roughly 16% for January. The metal surged to a record high of $5,594.82 on Thursday, marking its sixth consecutive monthly advance and its strongest monthly performance since 1999.
Goldman Sachs recently set a year-end target of $5,400 for gold, citing rising participation from private investors. The metal rallied sharply earlier in the week after the Federal Reserve held rates steady, while comments from Fed Chair Jerome Powell failed to halt the dollar’s earlier slide.
The sharp reversal extended beyond gold. Silver plunged roughly over 25% after hitting a record $121.64, and has wiped out $1.45 Trillion in 2 days, marking one of its most volatile sessions in years.
Source: TradingView via X
Bloomberg strategist Mike McGlone noted that extreme price moves increase the risk that 2026 could mark enduring peaks for precious metals, particularly silver. UBS analyst Giovanni Staunovo described the pullback as a consolidation phase following a powerful rally, while emphasizing that several gold-supportive drivers remain in place.
Global Demand and Market Positioning
Physical demand indicators showed mixed signals. Gold premiums in India climbed to their highest level in more than a decade amid strong investment demand ahead of a possible duty increase. In China, premiums also rose as investment and jewellery demand picked up. Independent analyst Ross Norman said gold could dip further in the near term but still projected an average price above $5,300 in 2026.
Gold’s sharp drop underscores how quickly sentiment can shift when policy uncertainty meets crowded positioning. With Trump’s Fed chair decision, markets now look to clarity rather than momentum to guide the next move.
Source: https://coinpaper.com/14183/gold-price-prediction-gold-falls-7-under-5-k-barrier
