Updates lede and prices, adds comment
Precious metals remain on course for monthly gains
Trump announces Kevin Warsh as new Fed Chair
Gold hit record high of $5,594.82 on Thursday
By Pablo Sinha
Jan 30 (Reuters) - Gold prices tumbled by more than 8% to briefly break below the $5,000 mark as the dollar strengthened in the lead-up to Donald Trump's U.S. Federal Reserve announcement on Friday, though bullion remained poised for its biggest monthly gain since 1982.
Other precious metals also dropped sharply as profit-taking kicked in.
Spot gold XAU= was down 5.7% at $5,087.99 an ounce by 1257 GMT, having slid as low as $4,957.54 earlier in the session.
U.S. gold futures GCcv1 for February delivery were down 4.6% at $5,081.70.
"I interpret this decline as a strong correction and profit-taking following the rapid rally, which prompted many investors and institutions to reassess their positions and reduce risk exposure," said Rania Gule, senior market analyst at XS.com.
Gold scaled a record peak of $5,594.82 on Thursday and is still on track for a more than 17% gain this month, heading for a sixth straight monthly gain.
The dollar held higher after President Trump chose former Federal Reserve Governor Kevin Warsh - perceived as a relatively hawkish pick - to head the U.S. central bank when Jerome Powell's term ends in May.
A stronger U.S. currency makes dollar-priced gold more expensive for overseas buyers. USD/
Physical gold premiums in India rose to their highest in more than a decade on strong investment demand ahead of a likely duty increase. Premiums in China jumped after a pickup in investment and jewellery demand. GOL/AS
"We see gold dipping far lower than today but see a recovery and an average of $5,375 for 2026, reaching a peak of $6,400 during the fourth quarter," said independent analyst Ross Norman.
Among other precious metals, spot silver XAG= was down 14.1% at $99.79 an ounce after dropping as low as $95.79. The metal hit a record high of $121.64 on Thursday and has surged 42% this month, on track for its best monthly performance.
"Although a significant part of the move in the rise in silver has been based upon sound fundamentals, there was clearly a speculative excess within the market and I think that's getting blown off," Norman added.
Spot platinum XPT= lost 12.6% to $2,298.76 an ounce after hitting a record high of $2,918.80 on Monday. Palladium XPD=, meanwhile, plunged 9.3% to $1,819.75.
(Reporting by Pablo Sinha in BengaluruAdditional reporting by Swati VermaEditing by David Goodman)
((Pablo.Sinha@thomsonreuters.com))
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