Gold and silver prices dropped sharply as investors rushed to exit crowded safe-haven positions. Losses accelerated on Monday after a severe sell-off on Friday. The reversal ended a rally that had lifted metals to historic highs.
In Asian trading on Monday, spot gold fell more than nine percent to about $4,403 per ounce. Silver dropped around 15 percent to below $72 per ounce. Investors had driven both metals to record levels earlier this year.
Improved policy outlook cools investor fears
Strong gains earlier reflected geopolitical tension and uncertainty over US monetary policy. Investors also feared political influence over the US central bank. Those concerns eased after President Donald Trump nominated Kevin Warsh as the next chair.
Markets welcomed the nomination and reacted with renewed confidence. The US dollar gained about one percent on Friday against several major currencies. As the dollar strengthened, gold suffered its steepest one-day fall since 1983, dropping more than nine percent. Silver plunged by 27 percent during the same session.
Analysts at Deutsche Bank said the nomination triggered the sell-off. They said clearer leadership encouraged aggressive profit taking.
Stock markets fall as commodity weakness spreads
The retreat in metals weighed on global equity markets. Asian stocks fell sharply on Monday as risk sentiment weakened. South Korea’s Kospi index led regional losses with a fall of more than five percent.
Hong Kong’s Hang Seng dropped around three percent. Japan’s Nikkei 225 slipped by more than one percent. European markets also opened lower, with the UK’s FTSE 100 down 0.4 percent early in trading.
Mining shares faced heavy selling pressure. Fresnillo and Endeavour Mining both fell by about seven percent as metal prices sank.
Oil prices decline alongside metals
Energy markets also moved lower. Global crude oil prices dropped more than five percent. Traders pointed to steady output plans from major producers and easing tensions between the US and Iran.
A stronger dollar added further pressure on oil prices. Oil trades in dollars, which increases costs for non-US buyers. That effect often dampens demand.
Record-breaking rally gives way to volatility
Precious metals delivered exceptional gains throughout 2025. Gold recorded its strongest annual rise since 1979. Markets faced repeated shocks from trade tariffs and fears of overvalued artificial intelligence stocks.
Those concerns pushed metals to repeated record highs. Gold peaked above $5,500 in late January. Silver also reached an all-time high above $120.
Profit taking outweighs long-term support
Wall Street analysts expect at least two US interest rate cuts in 2026. Lower rates usually support gold by reducing yields on alternative assets.
Gold’s scarcity continues to support long-term demand. About 216,265 tonnes have ever been mined, according to the World Gold Council. Central bank buying helped drive the multi-year rally.
However, stretched prices left markets exposed to sharp corrections. Mark Matthews of Bank Julius Baer told Reuters prices had turned parabolic. He said once profit taking began, selling quickly snowballed.
