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[Guide] Witnessing history. Hello everyone, between 2:00 AM and 3:00 AM Beijing time, we witnessed history once again. Gold and silver experienced a violent sell-off, with spot silver plunging over 35% at one point, marking its worst single-day performance in history. Spot gold plummeted more than 10%, recording its largest single-day drop since 1983.
Analysis points out that news of Trump nominating Kevin Warsh for the next Federal Reserve Chair appears to have alleviated market concerns about central bank independence and spurred a significant rally in the US dollar. Trump also stated, "Warsh has not committed to cutting rates; it would be inappropriate to demand that he do so. I might discuss rate cuts with him; Warsh also wants to cut rates. Warsh will lower interest rates without pressure from the White House." The sharp decline was initially triggered by reports of Warsh's nomination but accelerated further during the early Beijing morning hours—as investors who had previously rushed into precious metals scrambled to take profits. The soaring US Dollar Index also pressured gold and silver: a stronger dollar makes it more expensive for overseas investors to buy gold and silver, while simultaneously undermining the theory that "precious metals will replace the US dollar as the global reserve currency."
Matt Maley, Equity Strategist at Miller Tabak + Co., said, "This is insane. A large part of it is likely 'forced selling.' Recently, day traders and other short-term traders have shown the most enthusiasm for an asset like silver, so some leverage had built up in silver. With such a severe plunge today, margin calls are coming out." Another analyst noted that the market is "trading Warsh as a hawk." "Selecting Warsh should help stabilize the US dollar and reduce (though not eliminate) the asymmetric risk of a deep, sustained weakening of the dollar, as he would challenge the 'debasement trade'—this is also the reason for the significant decline in gold and silver." Claudio Wewel, FX Strategist at Julius Baer's Sustainable Asset Management, stated that the market has been influencing precious metal trends based on speculation about "who will be nominated as the next Fed Chair." "The market has clearly been pricing in the risk of a 'more dovish' candidate, which has largely driven gold prices and other precious metal prices higher. In the past 24 hours, there has been some shift in the news flow."
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