Global equity markets confronted significant headwinds as a dramatic collapse in precious metals prices reverberated across financial markets. Gold plunged 8% to $4,465 an ounce on Monday, retreating sharply from last week’s peak near $5,600, while silver dropped 7% after Friday’s catastrophic 30% decline. The metals meltdown triggered widespread selling across mining stocks and contributed to broader market weakness, with US index futures pointing to losses exceeding 1%.
President Trump’s Friday announcement naming Kevin Warsh as his Federal Reserve chair nominee fundamentally altered market dynamics that had supported precious metals’ record-breaking rally. Warsh, a former Fed governor with established credibility in central banking circles, represents a choice favoring institutional experience over political alignment. His anticipated succession of Jerome Powell in May, pending Senate confirmation, has eased investor concerns about potential politicization of monetary policy.
Market analysts attribute the metals collapse to relief that Fed leadership will remain independent rather than becoming a political tool. Susannah Streeter from Wealth Club noted that Warsh’s deep Federal Reserve experience suggests he won’t simply acquiesce to external pressure, prompting investors to abandon defensive positions accumulated during weeks of record-setting rallies. The speed and severity of the reversal reflects how concentrated these positions had become.
The selling pressure extended well beyond precious metals, engulfing industrial commodities and traditional financial markets. Platinum fell 10% and copper declined 9%, while equity indices worldwide opened lower. British mining companies with precious metals exposure led the FTSE 100’s decline, with major firms losing more than 5% of their value. Bitcoin dropped 9% over the weekend and oil prices fell 5% as multiple asset classes participated in the broad repositioning.
Despite the brutal near-term correction, precious metals maintain remarkable year-over-year performance, with gold up 65% and silver soaring 120%. Jefferies analysts suggest the selling primarily reflects unwinding of overcrowded speculative positions rather than fundamental deterioration, with positioning indicators showing substantial normalization. Deutsche Bank maintains its forecast for gold reaching $6,000 this year, indicating some analysts view the correction as a healthy consolidation rather than a trend reversal.