Gold and Silver Dive On Fed Chair Nomination, Sell-off

 

Gold and Silver Dive After Trump Fed Pick

(Bullion News Network) – On Friday, gold and silver logged their largest single-day losses in years. The spot price of silver led the way, sliding more than $31 (27%+) per troy ounce to erase all of the week’s gains. Gold also tacked on a massive loss to end the week, shedding over $524/ozt and falling below $4,500 per troy ounce just two days after logging a fresh all-time high. The price action strongly favored gold, driving the gold-silver ratio a whopping 12.6 points higher to more than 59:1. The massive drop was not relegated to the gold and silver markets, either. The spot price of platinum dropped by nearly $480 per troy ounce, while palladium lost over $311/ozt. Wall Street also retreated to end the week, a move driven primarily by U.S. President Donald Trump’s decision to nominate Kevin Warsh to become the next Chairman of the Federal Reserve.

On Friday, Trump confirmed Kevin Warsh’s appointment as the Chairman of the Federal Reserve. If confirmed by the Senate, Warsh will replace current Fed Chair Jerome Powell in May, when Powell’s term expires. Warsh previously served on the Federal Reserve Board of Governors under George W. Bush and Barack Obama. During and following the 2008 financial crisis, Warsh served as a liaison between the Federal Reserve and Wall Street. President Trump had previously told reporters that Warsh and Scott Bessent, the current Treasury Secretary, were two frontrunners for the position on the Federal Reserve. Earlier this month, Trump appeared to eliminate Bessent from the nomination race, telling reporters that he prefers Bessent remain Treasury Secretary.

The move appeared to take a bite out of uncertainty, and a larger sell-off in the gold and silver markets drove these safe haven assets sharply lower to end the week. According to some analysts, Warsh’s history as an ally of Wall Street means that he’s likely to push back against President Trump on certain issues, which could reinforce the independence of the Federal Reserve. Throughout 2025, Trump repeatedly attempted to pressure current Fed Chair Jerome Powell into cutting interest rates more quickly. Earlier this month, the Federal Reserve revealed that it had been issued a subpoena by the Department of Justice in relation to an investigation into Powell and the central bank. The investigation concerns accusations by Trump and his Republican allies that Powell misled Congress about the rising cost of renovations to the Federal Reserve headquarters building in D.C.

Powell released a video response to the subpoena, claiming that it was part of a large attempt to pressure him and the FOMC into cutting interest rates. Precious metal prices reached new heights following the exchange, which some analysts believe represented a threat to the longstanding independence of the Federal Reserve. Walsh’s Jan. 30 appointment coincided with a market-wide sell-off, driving gold and silver to their largest single-day losses in years.

During a press conference earlier this week, Chair Powell responded to rising gold and silver prices, which some analysts speculate signaled declining belief in the credibility of the Federal Reserve. Powell dismissed gold’s rally, saying that rising precious metal prices are not necessarily indicative of growing concerns about the credibility of the FOMC.

The argument can be made that we are losing credibility, but that simply is not the case. If you look at wherein inflation expectations are, our credibility is right where it needs to be […] We don’t get spun up over particular asset change prices, although we do monitor them, of course.

Warsh’s nomination is unlikely to escape the Senate without controversy, though. Earlier this month, GOP Senator Thom Tillis spoke out against the investigation into Jerome Powell, vowing on X to oppose any confirmation to the position of Fed Chairman until the Powell investigation is resolved. Tillis reaffirmed this position in a separate X post on Friday, acknowledging Warsh’s qualifications but restating his opposition to confirming any nominee before Powell’s investigation is concluded.

My position has not changed: I will oppose the confirmation of any Federal Reserve nominee, including for the position of Chairman, until the DOJ’s inquiry into Chairman Powell is fully and transparently resolved.

Tillis’ opposition would be a significant obstacle in Warsh’s confirmation. The Banking panel is responsible for approving nominations prior to a larger vote in the Senate, and this panel is currently run by a 13-11 Republican majority. Assuming that every Democrat blocks the confirmation, Warsh’s confirmation would fail to escape the committee. On Thursday, Senate Majority Leader John Thune told reporters that it would “probably not” be possible to confirm a Trump Fed nominee without the support of Thom Tillis. Tillis himself views the Powell investigation as an attack on the Federal Reserve’s independence, saying in his Friday X post that the investigation is based on testimony that “no reasonable person could construe as possessing criminal intent” on the part of Powell. “Protecting the independence of the Federal Reserve from political interference or legal intimidation,” Tillis continued, “is non-negotiable.”

Meanwhile, the Federal Reserve is largely expected to leave interest rates unchanged when it next meets in March. CME FedWatch projects the probability of a rate cut at 15.3%. Between today and the March 18th meeting, the FOMC will have access to several inflation and employment reports, all of which could play a role in rate cut speculation – and safe haven asset demand.

Dip-buying activity placed added stress across the retail precious metals market, prompting statements from several major online retailers. The spot price of silver dipped all the way down to $76 per troy ounce, a loss of over $40/ozt compared to yesterday’s closing price, before rebounding to recoup around $10 of those losses before markets closed. Gold also managed to pare some of its losses but is set to close the day down nearly $500 per troy ounce.

Moving forward, Warsh’s nomination and confirmation in the Senate will likely dominate financial headlines as markets attempt to assess how the economist’s tenure as Fed Chair will impact both inflation and the employment market.