Gold Prices Drop After Trump Signals Warsh as Fed Pick
Gold Prices Drop after Trump signals Kevin Warsh as Fed chair, strengthening the U.S. dollar and forcing traders to rebalance amid a steep metals sell-off.
KEY TAKEAWAYS
- Gold fell about 10.0% to $5,136 per ounce after the Warsh pick.
- Silver prices plunged, marking the worst day for precious metals since the 1980s.
- A firmer U.S. dollar and profit-taking amplified the metals sell-off and shifted trader positioning.
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Gold prices dropped sharply on Jan. 30, 2026, after President Donald Trump announced his intention to nominate Kevin Warsh as Federal Reserve chair. The move intensified expectations of tighter monetary policy, strengthened the U.S. dollar, and triggered a steep sell-off in precious metals.
Gold and Silver Plunge
Gold fell about 10%, sliding from $5,500 per ounce to $5,136 in an intraday sell-off following the Fed chair announcement. Silver prices also plunged, marking the worst day for precious metals since the 1980s. The decline came after metals had reached record highs earlier in the year and reflected profit-taking amid a firmer U.S. dollar, which amplified the losses.
Warsh Nomination and Policy Outlook
President Trump said he plans to nominate Kevin Warsh to replace Jerome Powell as Fed chair. Warsh served on the Federal Reserve Board from 2006 to 2011 and was involved in the central bank’s response to the 2008 financial crisis. He later criticized large Fed asset purchases and the handling of inflation.
Warsh is viewed as hawkish, generally supporting higher interest rates and critical of the Fed’s balance-sheet size. He has indicated openness to lowering short-term rates only if the balance sheet is substantially reduced. His affiliations include the Hoover Institution, the family office of Stanley Druckenmiller, and board roles at UPS and Coupang.
Since September 2025, the Fed has cut its policy rate by 0.75 percentage point, with markets pricing in one more cut this year. Inflation remains above the Fed’s 2% target, and policymakers have signaled caution amid tariffs and a tight labor market.
The nomination requires U.S. Senate confirmation and faces potential political hurdles linked to GOP criticism over Department of Justice subpoenas involving Powell. Powell’s term as Fed chair ends in May 2026, though he could remain on the Fed Board through 2028, making the confirmation process a key factor in the central bank’s leadership and near-term policy direction.
