In the early hours of January 31st, Beijing time, spot silver prices plummeted by as much as 36%, marking the largest intraday drop in history; spot gold prices fell over 12%, briefly breaking below $4,700 per ounce, experiencing their largest single-day decline in 40 years. The three major U.S. stock indices closed collectively lower, with the Nasdaq index falling nearly 1%. Gold stocks fell sharply across the board, with Barrick Gold, AngloGold Ashanti, Kinross Gold, and Agnico Eagle Mines all dropping more than 10%.
On Friday, gold suffered its worst decline in four decades, while silver recorded its largest-ever intraday plunge. Spot gold prices fell more than 12% at one point, touching a low of $4,682 per ounce, the biggest single-day drop since the early 1980s. By the close, spot gold was down 9.25% at $4,880 per ounce. Spot silver plunged over 36%, hitting a record intraday low of $74.28 per ounce. It ended the session down 26.42% at $85.259 per ounce.
Bloomberg noted that despite recording monthly gains for the month, Friday's sell-off represented the most significant blow to the rally since a similar downturn last October. This round of selling was triggered by a rebound in the U.S. dollar, following reports—later confirmed—that the Trump administration was preparing to nominate Kevin Warsh as the new Federal Reserve Chair.
Suki Cooper, Global Head of Commodities Research at Standard Chartered, stated that the market was already primed for a correction, and the trigger for this sell-off was likely a combination of factors, including the announcement of the Fed Chair nominee and broader capital flow dynamics. She added, "Whether looking at the dollar's movement or expectations for real yields, these factors combined to become the catalyst for profit-taking."
The strengthening dollar dampened investor confidence. On Friday, the U.S. dollar index surged, posting its largest single-day gain since last July. The plunge in gold and silver dragged down currencies from the Australian dollar to the Swiss franc. The DXY dollar index ended a volatile month with a gain of approximately 0.9%, during which it experienced significant swings due to Trump's policies.
On Friday, the three major U.S. stock indices closed lower collectively. Uncertainty surrounding Federal Reserve policy, inflationary pressures, and geopolitical risks exacerbated market worries, weighing on U.S. stock performance. At the close, the Dow Jones fell 0.36%, the S&P 500 dropped 0.43%, and the Nasdaq declined 0.94%.
Gold stocks experienced a broad-based sharp decline: Newmont fell 11.52%, Agnico Eagle Mines dropped 11.65%, Barrick Gold plunged 12.09%, AngloGold Ashanti declined 13.28%, Kinross Gold fell 13.85%, Royal Gold dropped nearly 10%, and Franco-Nevada decreased by 10.51%. Most major tech stocks fell, with the Wind US Tech Seven Giants Index down 0.32%. Individually, Meta Platforms and Taiwan Semiconductor Manufacturing Co. fell nearly 3%, Amazon dropped 1%, while Tesla gained 3%.
The semiconductor sector mostly saw significant declines: Advanced Micro Devices fell over 6%, GlobalFoundries dropped 5%, while Micron Technology and Intel both fell more than 4%. NXP Semiconductors, ON Semiconductor, and Super Micro Computer declined over 3%. Most Chinese concept stocks fell, with the Nasdaq Golden Dragon China Index closing down 2.36%. Individually, Brainstorm Cell Therapeutics fell over 10%, Kingsoft Cloud dropped 7%, Bilibili, Li Auto, and XPeng fell over 3%, while Baidu, Alibaba, NetEase, and JD.com all declined more than 2%.
On the news front, U.S. President Trump formally announced his intention to nominate former Federal Reserve Governor Kevin Warsh as the next Fed Chair. Trump stated that candidate Kevin Warsh did not explicitly promise to lower interest rates during the application process but added, "of course he wants to lower rates." Furthermore, Trump dismissed concerns that Warsh had previously advocated for rate hikes. Trump also expressed no worry about the Senate confirmation process, saying, "This candidate is perfect. This is not an accident."
During his tenure at the Fed, Warsh was consistently vigilant about inflation and often supported higher interest rates. However, last year he shifted to echo Trump's view that rates could be significantly lowered, thus securing the world's most influential financial position. This shift has raised concerns among Fed watchers, who fear that making a willingness to cut rates a "litmus test" for the next chair could damage the central bank's independence.
Jay Hatfield, Chief Investment Officer at Infrastructure Capital Advisors, said that nominating Kevin Warsh as Fed Chair "poses long-term risks to the economy" and described him as "extremely hawkish." He added that with less verbal guidance from policymakers, the market should expect increased interest rate volatility, and the importance of each data release would rise.
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