MW Gold falls as expectations of Warsh to Fed hits the dollar debasement trade
By Barbara Kollmeyer
Silver futures also trade sharply lower
Gold
The brakes are being pumped on the breathless rally for gold and other precious metals Friday amid rising expectations Kevin Warsh will be nominated to be the next Federal Reserve chair.
Gold (GC00) tumbled more than 3%, or $171, to $5,179 an ounce, which if continues will mark the first down session in nine. On Thursday, gold settled at a fresh record of $5,318.40 an ounce, a gain of $14.80, or 0.3%.
However, gold saw selling earlier in the session after pushing above $5,500, recovered, then selling rebooted later in the day.
Silver (SI00) was also selling off, with futures tumbling nearly 5%, or $5.67, to $108.75 an ounce after closing above $114 an ounce on Thursday.
Thursday was marked by a volatile day across markets, with tech under pressure, but also soaring copper prices. Comex, copper for March delivery (HGH26) soared 4.7% to settle at $6.20 a pound, its highest finish dating back to 1972, but fell over 3% to $6.00 a pound on Friday.
The ICE Dollar Index DXY was up 0.2% to 96.54 early Friday. The dollar has been under pressure this year after getting battered in 2025, the opposite of precious metals that investors have piled into.
The dollar was gaining along with Treasury yields BX:TMUBMUSD10Y, with analysts pointing to rising speculation that Warsh as Fed chair would less supportive of lower interest rates, which would be dollar supportive.
Gold is priced in U.S. dollars so tends to move in the opposite direction as the U.S. currency.
"The move away from the dollar 'debasement' trade, which was previously showing signs of becoming entrenched, was something of a surprise to investors who have been actively seeking haven alternatives," said Richard Hunter, head of markets at Interactive Investor.
"Warsh has been among the most market-friendly candidates, as he is a former Fed governor with a history of hawkish views, especially on balance sheet reduction. Given how adamant Trump has been on reducing rates, it's safe to assume Warsh has taken a more dovish stance during the interview process - but this pick may suggest a desire to calm speculation on Fed independence loss," added currency strategists at ING led by Francesco Pesole.
Wall Street strategists have been lifting price targets for gold and silver this year. JPMorgan has made a case for a possible path to $8,500, and gold's rally surpassed a recently boosted year-end target of $5,400 from Goldman Sachs.
"Price action over the next few days will be key - naturally, $5,000/oz in gold, and $100/oz in silver stand as key 'lines in the sand' while, bluntly, the two moving sideways and becoming rather boring for a few days would probably be the most constructive signal that the market could offer right now," Michael Brown, senior research strategist at Pepperstone, told clients in a note.
Read: Investors aren't scared of record gold and silver prices. Wall Street's price targets are struggling to keep up.
-Barbara Kollmeyer
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(END) Dow Jones Newswires
January 30, 2026 03:59 ET (08:59 GMT)
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